RHB Research said Malaysia, Singapore and Indonesia are expected to account for a combined 74% of the US$5.7bil (RM25.1bil) Asean DC market by 2025.
PETALING JAYA: Investments into data centres (DCs) in Malaysia, Singapore and Indonesia have been growing rapidly over the past few years.
The interest in the DC space has accelerated digital adoption as it offers good valuation premiums for strategic infrastructure assets.
According to RHB Research, Malaysia is seeing a raft of new and emerging DC investments with over 800 megawatts capacity projected to come onstream in phases over the next five years, with lower land and energy costs as the key draws.
The country is home to some 41 enterprise DCs which include AIMS Data Centre, Bridge Data Centres, GDS Services, Keppel DC and Telekom Malaysia Bhd
’s (TM) One / Vads.
Citing Arizton Advisory and Intelligence, RHB Research said the domestic DC market is projected to grow at a compound annual growth rate (CAGR) of 7% to US$1.6bil (RM7bil) by 2027 from US$1.1bil (RM4.84bil) in 2021, driven by rapid hyperscale investments and strong co-location demands.
Local companies involved in DCs include TM, TIME Dotcom Bhd and YTL Power Bhd, among others.
It said MN Holdings Bhd and Sunway Construction Bhd are budding DC contractors in Malaysia.
Citing Frost & Sullivan, RHB Research said the three markets are expected to account for a combined 74% of the US$5.7bil (RM25.1bil) Asean DC market by 2025.
“The positive DC outlook resonates well with its preference for fixed-line plays,” the research house said.
It said Singapore’s decision in early 2022 to calibrate new DC builds has been a blessing in disguise, with Equinix, AirTrunk, Yondr Group and GDS Holdings locating their maiden facilities in Johor.
It viewed the setting up of cloud regions by Microsoft and Amazon Web Services as a major coup with significant upsides for the domestic DC industry and the economy.
The Indonesian DC market is expected to grow at a 6% CAGR between 2022-2028 to US$3.1bil (RM13.64bil), according to Arizton Advisory and Intelligence’s March 2023 report.
It said DCs are physical sites/buildings that house mission-critical data and information under strict security and redundancy protocols.
A typical DC facility consists of racks, servers and high powered equipment used for the processing, storing, managing and transferring of data and applications.
RHB Research said demand for hyperscale DC facilities is being fuelled by strong investments and upgrades to new technologies and the transition to 5G networks.
Asean has become a major hotspot for DCs, thanks to accelerated digitalisation, accommodative policies, and the lower cost of land and energy, with content and over-the-top providers focusing on the region’s population demographics and clamorous appetite for social media.
Consequently, hyperscalers are compelled to move closer to end-users (edge computing) to reduce latency with the setting up of new cloud regions.
