APAC data centre capacity breaches 13,400MW in Q1

Mumbai stood out in the region with its capacity surpassing the 2,000MW mark.

According to the Q1 2023 Data Centre Report published by Knight Frank in partnership with DC Byte, the total data centre capacity across nine key Asia Pacific markets surpassed 13,400MW, with a 425MW increase since the start of the year - this includes live, under construction and phased power. 

These markets include established ones such as Tokyo, Shanghai, Sydney, Singapore, and Hong Kong, as well as fast-growing tier 2 markets such as Mumbai, Seoul, Kuala Lumpur, and Bangkok. 

Here’s more from Knight Frank:

The positive trajectory across APAC is a result of both established and hyper-growth data centre markets leveraging the momentum of the previous four quarters. Much of this growth was fuelled by market expansions recorded in Mumbai and new capacity announcements in Bangkok, Kuala Lumpur and Tokyo.

Mumbai emerged as the standout growth story of Q1 2023, with the market’s total capacity expansion surpassing the 2,000MW milestone. Supply movements have moderated compared to previous quarters, with over 40% of its current live capacity absorbed throughout 2022.

Bangkok also experienced impressive growth, surging by nearly 30% since the start of the year. Building on the strong absorption witnessed in 2022, market players are actively expanding their presence and increasing their share of the market. Multiple operators are pursuing capacity expansions across different locations in the city, capitalising on favourable market conditions. Similarly, Kuala Lumpur witnessed substantial growth, accounting for one-third of the total supply (250MW) added to the market in the past year.

Supply in Singapore remains highly constrained as the data centre operator market awaits the government's results of the ‘call for applications’ programme. On the demand side, Singapore and key markets like Tokyo, Sydney, Shanghai, and Hong Kong continue to exhibit robust activity, driven by leading cloud providers and financial institutions.

In Hong Kong, the total capacity was 989MW as of Q1 2023 and the top 5 operators account for 62% of market share. There was only a vacant supply of 60 MW, while another supply of 136 MW is under construction. There has been no new capacity added to the market since the end of 2022.

Fred Fitzalan Howard, Data Centre Lead APAC, Knight Frank said: “The data centre sector has witnessed a remarkable acceleration in recent years, driven by the exponential growth of internet usage across commerce, social media, entertainment, and cloud adoption. This surge has piqued the interest of a wide range of investors, including growth capital, buyout, real estate, and infrastructure investors. As data centres gain prominence as an asset class, investors are leveraging various strategies such as mergers and acquisitions (M&As), joint ventures, and land acquisitions to tap into this thriving sector. We anticipate notable trends including increased M&As and land acquisitions in emerging Tier 2 cities, a growing emphasis on data residency and sovereignty, persistent supply chain disruptions and delays, and a heightened focus on sustainability in data centre development. Recognising that data centres encompass more than just physical infrastructure; these projects require expertise in areas such as real estate and digital infrastructure."

James Murphy, APAC Managing Director at DC Byte, added: "Despite well-documented barriers to data centre development in the more established markets across the region, significant capacity is still being added as demand for cloud services continues to be strong. In the past, this demand would have been contained to a few markets but we are increasingly seeing new cloud regions and availability zones being established in new markets which accounts for the significant growth in both supply and demand regionally."

Russell Lam, Executive Director of Capital Markets, Knight Frank said: "Stabilised data centers have become highly desirable assets in the private equity real estate market in recent years. Typically, they are tied to long leases with built-in inflation step-up and are operated by reputable colocation providers. These types of properties are particularly well-suited for investors pursuing core or core-plus investment strategies.