Developing Asian markets are seeing rising demand for data centres serving their digital economies and those of developed markets.

Indonesia and Malaysia in particular are attracting attention from global data centre operators, as their governments continue to invest in digital infrastructure. Meanwhile India continues to be a major focus for data centre development.

Today, developing Asian economies lag developed markets in terms of the numbers of data centres constructed so far. A Savills Asia Pacific report published last year showed that Indonesia, Malaysia, Thailand and Vietnam had fewer data centres than Hong Kong and Singapore, despite having more than 30 times the population. Meanwhile India has fewer data centres than Australia.

Simon Smith, Head of Research and Consultancy at Savills Asia Pacific, says: “Developing Asian nations will see increased demand for data centres as their online populations and digital economies grow. India, Indonesia and Malaysia in particular have invested heavily in their digital infrastructure.”

More than 200 million of Indonesia’s 275 million population has internet access and its online retail market is predicted to grow to $95 billion by 2025. Indonesia is also a burgeoning tech hub, with a number of homegrown unicorns including GoTo, which raised more than $1 billion when it listed last year.

Rules which require personal financial information to be stored in-country mean its domestic market is significant. The government is encouraging digital industry expansion, including data centres.

Indonesia’s data centres may also be constructed to serve other markets. Batam, an island near Singapore, is tipped to be a future data centre hotspot, serving both domestic demand and demand from Singapore. The city-state is already a regional data hotspot, however new development is constricted due to strict regulations. Batam has both conventional and renewable power sources, making it attractive to operators.

Malaysia has also invested in its digital infrastructure, with more underwater cable links, boosted domestic connectivity and 5G. This has sparked interest from foreign companies, such as Australian data centre operator NEXTDC, which is building a 65MW colocation centre, which will be Malaysia’s largest Tier IV facility.

India’s huge population and growing wealth means it will be one of the region’s major sites for data centre development. Savills research reports that 150MW of capacity was added in 2022 and predicts a further 250MW will be added this year, meaning that total capacity will be more than 1GW.

Government-led initiatives such as Digital India, and an emphasis on self-reliance and data protection through data localisation are expected to increase the volume of data in the country, resulting in an increased demand for data centres.

The rise of AI could benefit developing nations in Asia, says Smith. “AI does not have the same requirement for low latency as other technologies. This means data centres supporting AI do not need to be as close to the markets they serve. Consequently, developing markets with cheaper land and power could become more attractive to data centre operators.”

Further reading:
Asia Pacific Retail Spotlight

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