Emerging data centre markets in APAC drawing investor attention

Mumbai and Seoul are expected to drive investment moving forward.

Ongoing power shortages are driving the development of emerging data centre markets in Asia Pacific while fueling rent increases in established markets globally, according to a new report from CBRE. 

Asia Pacific has experienced steady rental rate increases due to strong demand and rising construction and operational costs, despite a relatively large amount of new inventory. Notably, Singapore stands out with one of the highest rental rates, exceeding $330 per kW/month. 

Investors are now turning their attention to emerging markets in Asia Pacific, such as Mumbai (India) and Seoul (South Korea), to secure data centre capacity. These markets offer favorable conditions in terms of power and land resources, which are expected to drive investment and foster future growth. 

“Securing reliable power is the top priority for data centre operators across Asia Pacific,” said Dedi Iskandar, Head of CBRE Data Centre Solutions, Advisory & Transaction Services, Asia Pacific. “Markets with accessible, cost-effective power sources are becoming hotspots for data centre expansion. AI-related industries, particularly in Tokyo and Sydney, show massive potential with multi-MW requirements.” 

The growth of artificial intelligence (AI) is a major driver behind the record levels of data centre demand. This trend is intensifying the need for innovative data centre designs and technologies, leading to new development or conversions of unused industrial space.

Data centre inventory continues to rise in markets where local governments are integrating renewable energy into the grid or utility companies are upgrading transmission lines. In the first quarter of 2024, Asia Pacific’s data centre inventory increased by 22% year-over year reaching 2,996 MW. Tokyo, Sydney, Hong Kong and Singapore each have well over a half-GW of live power capacity, despite tighter planning constraints in Singapore. The region’s capacity pipeline remains strong, with numerous developments currently under construction. 

CBRE’s Global Data Centre Trend Report 2024 analyzes key variables, such as total inventory, vacancy rates, net absorption, pricing and rental rates, and availability, in established and emerging markets across North America, Europe, Asia Pacific and Latin America. 

“Global power shortages are driving an unprecedented surge in data centre rental rates, particularly in North America, while AI advancements are having a significant impact on data centre demand,” said Pat Lynch, Executive Managing Director for CBRE’s Data Centre Solutions. “Pre-leasing data centre space well in advance of completion is commonplace across the globe, which underscores the robust demand in the market and the need for ongoing investment in development.” 

To read the full report, click here.