The "Southeast Asia Data Center Construction Industry - Outlook & Forecast 2024-2029" report has been added to ResearchAndMarkets.com's offering.

The Southeast Asia data center construction market is expected to reach a value of $5.3 billion by 2029 from $2.81 billion in 2023, growing at a CAGR of 11.18% from 2023-2029

The Southeast Asia data center construction market has grown significantly over the last few years with investments from several local and global data center operators. This will intensify the competition among the construction contractors and infrastructure providers. In Southeast Asia, colocation providers strategically build facilities in phases, aligning with market demand.

Looking ahead, there is an expectation for a heightened demand for power infrastructure featuring higher capacity systems in a 2N redundancy configuration across multiple facilities. Southeast Asian investors adopt various sustainable designs to ensure that the facility operates at a PUE of less than 1.5, which was not achievable by the operational data center built before 2017. The recent sustainable data center design practices are complimented by innovative air - and water-based cooling solutions, efficient power technologies, and sustainable construction practices.

The major hyperscale operators investing in the Southeast Asia data center construction market include Amazon Web Services (AWS), Microsoft, Meta (Facebook), and Google. Adopting direct-to-chip and immersion cooling solutions will witness a marked increase across newly built data centers in Southeast Asia to support the deployment of AI workloads. These cutting-edge cooling techniques enhance efficiency and superior thermal management, decreasing energy usage and heightening overall performance.

The Southeast Asian data center construction market has witnessed a significant increase in new entrants in the last few years, owing to its strong growth potential. The increase in new entrants will increase the competition for the existing data center operators, expanding their presence across countries. In Southeast Asia, the average land cost ranges from $10 to $25 per square foot. Regarding land acquisition costs, Malaysia and Vietnam are notable for their affordability, followed by countries like Indonesia, Thailand, and others, while Singapore stands out as the most expensive. Despite this, Vietnam, Indonesia, and the Philippines are witnessing significant digital activities such as e-commerce growth, government-led digitalization initiatives, and AI adoption.

The presence of approximately 140 submarine cables in Southeast Asia and the ongoing development of over 41 new ones point to a growing emphasis on factors such as AI development, digitization, and the escalating volume of data stored within the region. This trend is expected to drive increased investments in the Southeast Asia data center construction market in the foreseeable future.

In Southeast Asia, major cities such as Batam, Bekasi, Jakarta, Johor, West Java, Cyberjaya, Manila, Chon Buri, Ho Chi Minh City, and Bangkok collectively account for over 60% of the total data center capacity in the region. However, other cities are steadily narrowing this gap. Increased investments in data centers are anticipated to flow into these cities, driven by regulatory policies, the formation of data center clusters, and incentives such as low-cost labor and affordable land prices.

KEY MARKET TRENDS

Increased Digitalization

• Countries, including Singapore, Malaysia, Thailand, the Philippines, and others, emphasize digitalization as a key priority. Government incentives, ongoing digitalization efforts, and the increasing demand for cloud services are major factors contributing to the growth of the Southeast Asia data center construction market.
• Many governments are creating strategies to boost their countries' digital development. The Malaysia Digital initiative plays a pivotal role in fueling the expansion of the country's ecosystem across nine essential sectors. It promotes the uptake of digital technologies and creates opportunities in the digital economy, utilizing initiatives such as the Malaysia Digital Catalytic Programs (PEMANGKIN) and various other competitive offerings.

Adoption of Cloud-Based Services

• Global cloud service providers are expanding their presence in Malaysia and Thailand, following their past investments in Indonesia and Singapore. These cloud service providers are also expanding their self-built facilities in Singapore. New cloud regions are expected to open availability zones across the Philippines and Vietnam during the forecast period.
• The deployment of AI and machine learning workloads will witness significant growth, mainly contributed by global cloud service providers. Data center operators are redesigning their data centers to support AI workloads with liquid-based cooling technologies.
• The expansion of cloud services in Southeast Asia continues, fueled notably by local enterprises aiming to embrace digitalization for a competitive edge. The region's increased demand for cloud services witnessed a notable upswing during the pandemic. It continues to achieve great heights, primarily due to the crucial need for business continuity and the drive to maintain relevance within its specific industries.

Segmentation Insights

• The Southeast Asian data center construction market is predominantly influenced by the development of colocation facilities, which attract significant investments. The market sees continuous expansion as new entrants actively participate in establishing colocation data centers. Concurrently, hyperscale data center operators are strengthening their market footprint by investing substantially in cloud regions. Notably, in 2023, countries such as Malaysia, Indonesia, and the Philippines also witnessed notable investments in enterprise data centers.
• Southeast Asian countries like Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam experience a tropical climate. The predominant method employed for climate control in this region is air and water-based conditioning, chosen for its cost-effectiveness and ease of implementation. Nevertheless, alternative cooling methods, such as liquid cooling, are viable options to enhance energy efficiency and minimize consumption.
• The Southeast Asia data center construction market is experiencing an uptick in establishing data centers, particularly those undergoing Tier III and IV certification in either the design or construction stages. Many private and public entities, including those in banking, financial services, insurance (BFSI), education, and government sectors, are obtaining Uptime Institute's Tier III/IV certification either during the design phase or after the facility's completion.

Geographic Analysis

• Indonesia's new investment announcements will be reduced in 2023. However, some of the announced facilities between 2020 and 2022 became operational. This trend will continue, with many facilities likely to be built over the next few years.
• In the last two years, new investments in Malaysia have skyrocketed across Kula Lumpur and Johor. Upcoming capacity in Malaysia is growing beyond 2 GW, with most new facilities likely operational in 2024 & 2025. AI has further strengthened Malaysia's growth in the last few years.
• While Singapore has traditionally been a top location for data centers, it is anticipated to experience a slowdown, despite lifting the moratorium, as other factors come into play. In 2023, Infocomm Media Development Authority (IMDA) and the Singapore Economic Development Board (EDB) selected four data center operators, namely, Microsoft, AirTrunk, Equinix, and GDS, to build new facilities with 80MW of cumulative data center capacity. This is phase 1 allocation, where we expect phase 2 allocation to follow over the next 1-2 years. In addition, hyperscale self-built Microsoft, Amazon, and Meta projects are still adding capacity to the industry. Also, Keppel and Sintel's new data center projects will support Singapore's growth over the next few years, adding capacity over 300 MW.
• Thailand and the Philippines also witnessed several new investments in the last few years, with a cumulative capacity of over 600 MW in the pipeline, which will be coming online during the forecast period.
• Vietnam is witnessing more investments from local operators, likely VNPT and Viettel IDC, and we believe investments from global operators will continue to increase. We are witnessing investments from Gaw Capital and NTT Global Data Centers.

KEY QUESTIONS ANSWERED

• How big is the Southeast Asia data center construction market?
• What is the estimated market size in terms of area in the Southeast Asia data center construction market by 2029?
• What is the growth rate of the Southeast Asia data center construction market?
• What are the key trends in the Southeast Asia data center construction market?
• How many MW of power capacity is expected to reach the Southeast Asia data center construction market by 2029?

Key Attributes:

MARKET DYNAMICS

Market Opportunities & Trends

• Expanding Sustainability Initiatives
• Rise in Adoption of 5G Technology and Expansion of Edge Data Centers
• Advancing in Adoption of AI

Market Growth Enablers

• Increased Submarine Cable & Inland Connectivity
• Increasing Adoption of Cloud-based Services
• Increased Digitalization
• Adoption of Big Data & Internet of Things

Market Restraints

• Data Center Security Challenges
• Lack of Skilled Data Center Professionals
• Data Center Power & Network Outage Challenges

VENDOR LANDSCAPE

Key Construction Contractors

• Arup
• Aurecon Group
• CSF Group
• DSCO Group
• Gammon Construction
• NTT Facilities
• PM Group
• Studio One Design

Other Prominent Construction Contractors

• AtkinsRealis
• AWP Architects
• Corgan
• DPR Construction
• First Balfour
• Fortis Construction
• ISG
• Kienta Engineering Construction
• Linesight
• LSK Engineering
• M+W Group
• Nakano Corporation
• Obayashi Corporation
• Powerware Systems
• Sato Kogyo
• Red Engineering

Prominent Support Infrastructure Vendors

• ABB
• Caterpillar
• Cisco Systems
• Cummins
• Dell Technologies
• Eaton
• Rittal
• Schneider Electric
• STULZ
• Vertiv

Other Prominent Support Infrastructure Vendors

• Airedale
• Alfa Laval
• Canovate
• Cyber Power Systems
• Delta Electronics
• EAE
• Fuji Electric
• Fujitsu
• Green Revolution Cooling
• Hewlett Packard Enterprise
• HITEC Power Protection
• Huawei Technologies
• KOHLER Power
• Legrand
• Lenovo
• Mitsubishi Electric
• Narada
• Nortek Air Solutions
• Piller Power Systems
• Rolls-Royce
• Shenzhen Envicool Technology
• Siemens
• Socomec
• Trane

Prominent Data Center Investors

• Amazon Web Services
• Chindata Group (Bridge Data Centres)
• DCI Indonesia
• Digital Realty
• ePLDT
• Equinix
• GDS Services
• Keppel Data Centres
• NTT DATA
• ST Telemedia Global Data Centres
• Telkom Indonesia
• VADS (Telekom Malaysia)
• Viettel IDC

Other Prominent Data Center Investors

• AirTrunk
• Beeinfotech
• Big Data Exchange (BDx)
• Converge ICT Solutions
• Digital Edge DC
• Meta (Facebook)
• FPT Telecom
• Google
• MettaDC
• Microsoft
• OneAsia Network
• Open DC
• Princeton Digital Group
• Singtel
• Vantage Data Centers

New Entrants

• CtrlS Datacenters
• Digital Halo
• EdgeConneX
• Evolution Data Centres
• Flow Digital Infrastructure
• FutureData (Cyclect Group + TSG Group)
• Gaw Capital
• I-Berhad
• Infinaxis Data Centre
• Infracrowd Capital
• K2 Data Centres
• Minoro Energi Indonesia
• Nautilus Data Technologies
• Pure Data Centres Group
• YCO Cloud
• YTL Data Center
• Yondr

For more information about this report visit https://www.researchandmarkets.com/r/6q2lgg

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