US & Europe still preferred DC locations: Arcadis Study
Published 3 March 2021
Since the onset of COVID-19 pandemic, consumption of technology has gone deeper, amongst all walks of life.
This increased consumption has had a cascading effect on the back-end technology infrastructure. Data centres, which were lifeless big shiny buildings are suddenly swimming in a data deluge.
Companies, on their part, are increasing their data centre hosting capacity as consumption goes through the roof. According to research by Arcadis, which has come up with a Data Centre Location Index for 2021, only 3 Asian countries figure in the top 10 data centre locations- Singapore, Japan and UAE.
Arcadis has examined 50 national markets across eight supply and demand-side factors that will influence a company’s ability to set up a new facility.
“There is a need to consider two significant variables: the existing infrastructure and regulatory regime, as well as current and future demand for data. With a few exceptions that can be found at the top of this year’s ranking, markets often excel at one or the other,” the report stated.
While many wealthy nations showcase well-developed energy infrastructure and favourable policies, they generally do not represent the highest growth markets of the future, but often offer access to large markets such as the European Union.
Certain developing markets show improvement potential in the ease of obtaining permits, energy security and their approach to cybersecurity. When deciding where to place a new data centre, companies need to balance location-specific strengths with a market’s future potential, the report pointed out. Singapore ahead
After the US, Singapore is rated as the best location to set up a data centre. A major financial center and one of the largest shipping ports in the world, it ranks sixth in GDP per capita, has a well-educated workforce and stable government and is a natural co-location hub for serving markets across Southeast Asia and India.
Additionally, Singapore leads in internet connectivity and low energy prices.
However, it scores relatively low on energy security and domestic market size, making it heavily reliant on good relations with its neighbors, according to Arcadis. Also, availability of renewable energy sources is a problem the country needs to address.
Due to its small size, land availability remains a key concern for investors. Interestingly, the government has mapped out space beneath the city as it wants to move urban infrastructure like data centers, bus depots, and sewage systems underground, which are positives according to Arcadis.
Japan’s DC Karaoke
Following Singapore, Japan ranks third in the Data Centre Location Index. It has a high rate of data consumption, complete mobile broadband penetration, significant internal market size and by early and large-scale adoption of digital technologies by global and local enterprises.
These features create a landscape in which many of the major hosting and cloud providers are present alongside large-scale domestic suppliers. Nevertheless, an aging population, corresponding lack of available labour and high energy prices are driving up operating costs.
There are concerns about the availability of sufficient power in the future. In addition, many data center providers are including secondary locations, outside of Japan, into their business continuity plans due to the country’s relatively high risk of natural disasters, the report noted.
UAE’s DC storm
The country has well-established fiber broadband network, top mobile broadband penetration, while the ease of obtaining construction permits and a plethora of new smart city initiatives make it an emerging location for data centre investment.
UAE is centrally located in the Middle East, ensuring good proximity to submarine cables connecting it to the rest of the world, Arcadis said. However, the energy and carbon costs to cool servers in such a hot climate needs to be considered.
The UAE is also working to address energy security and cybersecurity. In response, the government is looking to introduce a new data protection law to support its national cybersecurity strategy, which are positive steps going forward.
Chinese DC Wall
Needless to say, China’s population and economic growth over the last decades make it the world’s largest internal market for data technology and services. It is in the midst of a digital transformation on a massive scale.
China is a pioneer in the adoption of smart city initiatives, which has increased use of cloud-based services in the country. More than 70 per cent of the population is using e-commerce for commercial and non-commercial activities. All of this is driving high demand for data centres.
However, China is a bit of an enigma. It remains a challenging market, especially for foreign investors, due to the difficulties in obtaining construction permits and the country’s relatively low score on energy security, noted Arcadis.
Indian DC spice
A strong government in the centre, well-educated population of over 1.3 billion and being the IT processing hub of the world have earned India a 44th place in the Index.
Despite poor scores across mobile broadband penetration, energy security, its approach to cybersecurity and the price of electricity, the country will continue to rise in importance in the global economy, pointed out Arcadis.
Further growth in India’s IT infrastructure and an increase in new internet companies will drive demand for new data centres. According to reports, there are 155 co-location data centres in India.
Taiwan, Hong Kong, Korea and Malaysia are ranled 11th, 12th, 16th and 22nd in the Arcadis Data Centre Location Index.