[KUALA LUMPUR] Johor and Singapore are at the forefront of a surging Asia-Pacific data centre boom, as the region attracts record cross-border investments and reshapes the global digital infrastructure landscape, said real estate consultancy Knight Frank.
Asia-Pacific attracted US$15.5 billion in cross-border data centre investment in 2024 – more than any other region globally – said Knight Frank’s latest global data centres report.
The global market rebounded sharply in 2024 as transaction volumes surged by 118 per cent to reach US$31.8 billion, driven by activity across single-asset purchases, portfolio acquisitions, redevelopment opportunities and development site sales.
Johor: a rising regional hub
Johor’s proximity to Singapore, coupled with lower operating costs and pro-business incentives, is drawing hyperscale cloud providers to secure development sites in the southern Malaysian state.
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Knight Frank expects Johor to add 335 megawatts (MW) of capacity by 2027, cementing its position as a rising regional hub.
A new market has emerged in Johor, not only attracting traditional Western hyperscalers but also seeing significant deployments from ByteDance, Alibaba and Sea Group.
These companies, which had not previously expanded at such scale in Asia-Pacific, are now making major investments, mainly for high density artificial intelligence (AI) deployments.
ByteDance, Alibaba and Sea Group – companies that have not historically expanded at scale in Asia-Pacific – are now ramping up deployments in Johor, particularly for high-density AI infrastructure. ByteDance, for instance, is partnering multiple operators to secure large capacities with delivery timelines of around 12 months.
“As a result, Johor is no longer just an alternative market – it has become a primary hub for hyperscaler expansion in South-east Asia, fuelled by cost advantages, scalability and unmatched deployment speed,” said the report.
Singapore still the star in the region
Across the Causeway, Singapore’s gigawatt-scale data centre market remains a highly competitive and valuable landscape for kW rack transactions, fuelled by a supply-demand imbalance that has transformed colocation leasing dynamics.
The capacity growth was affected by the government’s moratorium on new data centre construction between 2019 and 2022.
Even when the market reopened in 2022, only a limited number of highly efficient projects received approval, and stringent regulatory controls continue to constrain supply.
With vacancy rates below 1 per cent, transaction liquidity has shifted towards smaller rack deals, despite Singapore’s status as a large-scale market.
These fractional capacity deals have seen significant price surges, with some operators achieving pricing exceeding US$1,000. Investors and operators continue to recognise the profitability of these small-scale transactions, as co-location providers rapidly lease available capacity at premium prices.
Of the four operators allocated 20 MW each in July 2023, only Equinix has commenced construction, while Microsoft, AirTrunk, and Day One have yet to begin.
Given the strong demand for hyperscale capacity in Singapore, these assets are expected to be fully pre-let well before completion, said Knight Frank.
Global capacity continues to grow
Global data centre capacity is forecast to expand by 46 per cent over the next two years and by 177 per cent by 2030, adding more than 20,000 MW in the near term.
The average deal size hit US$75.4 million this year, up 15 per cent from 2023 and 44 per cent higher than pre-pandemic levels.
Stephen Beard, global head of data centres at Knight Frank, said operators and investors are aggressively targeting markets with power availability, strong connectivity and regulatory support.
“Sustainability is also a rising priority, with growing emphasis on renewable energy and efficient design,” he added.
In Singapore, the government has introduced a Green Data Centre Roadmap, with targets for energy reuse and advanced cooling systems. In the Nordic countries, data centres are increasingly powered by hydropower.
Asia-Pacific market gaining attention
Asia-Pacific, meanwhile, is expected to add 4,174 MW of capacity by 2027 through US$59 billion in planned investments, with key markets including Tokyo and Mumbai, and emerging hubs such as Bangkok, Melbourne and Johor.
Fred Fitzalan Howard, Knight Frank’s head of data centres for Asia-Pacific, noted that the region’s data centre market is poised for substantial growth, fuelled by increasing investor interest in both Tier 1 and emerging Tier 2 markets.
Over the next three years, the Asia-Pacific data centre market is projected to add approximately 8 GW of new capacity, with 25 per cent allocated to AI workloads. This is lower than the global average due to the region’s Tier 2 or Tier 3 status under US AI diffusion rules.
This expansion represents a capital expenditure of US$24 billion and a real estate requirement of 20 to 30 million square feet.
“While AI deployments are still nascent compared with the US and Europe, the groundwork is being laid for a broader rollout across Asia-Pacific,” Howard said.
He cautioned that navigating varied regulatory frameworks and adapting to US export controls on AI chips are crucial for maximising Asia-Pacific’s opportunities in this rapidly evolving sector.
