Asean to see fastest data centre growth in next 5 years: report

Global Switch's Woodlands data centre in Singapore.
Global Switch's Woodlands data centre in Singapore.
AUGUST 19, 2019 - 3:36 PM

SOUTH-EAST Asia will be the fastest-growing region for co-location data centres over the next five years, with an expected compounded annual growth rate (CAGR) of 13 per cent from 2019 to 2024, according to a Cushman & Wakefield report on Aug 19.

Big tech firms such as Google, Alibaba Group, and Amazon Web Services have expanded their cloud infrastructure footprint in the region in recent years, noted the report. Co-location data centres lease capacity and provide data centre services to clients.

The Asia-Pacific region as a whole is expected to have a CAGR of about 12 per cent over the same period, faster than North America's 6.4 per cent and Europe, Middle East and Africa's 11.1 per cent.

By as early as 2021, Asia-Pacific is set to oustrip North America as the largest data centre region by market size. The total market for Asia-Pacific co-location data centres is forecast at US$28 billion by 2024, compared to US$23.4 billion for North America.

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In particular, Singapore is ranked the third most robust data centre market in the world, in Cushman & Wakefield's Data Centre Competitiveness Index 2019. The city-state has been tops in the Asia-Pacific region since 2017.

Malaysia is the only other Asean market in the top 20 globally, ranked 18th in 2019, up from 24th in 2017. Within Asia-Pacific, Malaysia ranks fourth, with Asean peers at seventh (Thailand), ninth (Vietnam), and 11th (Indonesia).

"The economically active population in the Southeast Asian markets of Indonesia and Vietnam will spur increased IT consumption and explosive growth in e-commerce and digital banking. Demand for data storage across South-east Asia holds tremendous potential for data centre players," said Cushman & Wakefield director for leasing Lynus Pook.

But he added: "Still, the infrastructure in these markets is not fully developed, posing some challenges for data centre providers. As such, well-located data centres that are built with redundancies will therefore be in short supply and in high demand."

Until infrastructure levels in Thailand, Indonesia and Vietnam are "sophisticated enough to support the smooth operation of data centres", data centre players will continue to tap both Singapore and these emerging markets, said Cushman & Wakefield head of research for South-east Asia Christine Li. "They will favour Singapore for its relative security to store mission critical data and store the business-as-usual non-mission critical data in the neighbouring countries."

"The lack of data centre supply across the region means that demand remains keen, particularly in Singapore; first from the private sector and from the companies who tap into the government’s efforts to accelerate digital capability in line with its goal to be a Smart Nation," she added.