- Data centre demand outstripping supply.
- APAC offers alternatives in a saturated market.
- Massive growth and investment, especially in secondary locations.
Over much of the world, demand for data centre capacity is rising faster than it can be satisfied by data centre (DC) operators, driving up prices and forcing users to look outside the popular hubs for facilities.
Power availability is the main cause of the brakes being applied to growth in data centres in the US (especially North Virginia and Atlanta) and Europe (Frankfurt, London, Amsterdam, Paris – FLAP). That shortage is driving new opportunities in several hotspots in the Asia-Pacific region, including in India, Indonesia, and Malaysia, and to ‘secondary’ cities in Australia such as Melbourne.
Globally, average vacancy rates (the amount of resources unused in data centres) dropped by 2.1% in Q1 2025, falling to 6.6%, according to the CBRE’s Global Data Center Trends report.
The growth in demand for data centre facilities is driven largely by AI, with large hyperscalers committing billions of dollars to new projects, and snapping up space – increasing prices and lowering available capacity. Data centres in Singapore, Tokyo, Hong Kong, and Sydney saw a rise in inventory of 4.4%, but high demand and rising prices have shifted new DC developments out of ‘traditional’ hubs.
Hitting limits in the capitals
The primary APAC data centre hubs are limited by the price and availability of power, with Hong Kong and Singapore adding infrastructure but not significantly lowering vacancy rates due to naturally higher costs being passed on to users. Hong Kong’s data centre vacancy rates remain at 28% due to high costs. While Singapore has only 2% of total DC capacity unused, that’s down to government limits on greenfield development for new facilities, according to the CBRE.
Overall, India’s data centre capacity is forecast to rise to around 1.8 gigawatts (from 0.95 gigawatts in 2024) by 2026, driven by AI and growing digitisation of the local economy. Mumbai ranks sixth globally in places where capacity is under construction – much more than in European hubs like London and Dublin, Ireland.
Off the beaten track
Spill-over from the main centres of DC operation means areas previously considered secondary are gaining popularity. Yet outside the main APAC data centre hubs, it’s a lack of local skilled professional talent that is seen as the main limit to growth. Areas like Kolkata, India, and Iskandar Puteri and Selangor, Malaysia are the targets of significant investment in new builds, for example.
That’s a trend not limited to Asia: in Europe, Scandinavian countries are absorbing demand for compute and storage that can’t be satisfied by the FLAP cities.
At an international level, Malaysia and Indonesian are set to be the region’s fastest-growing places for companies needing to source co-location facilities, with growth rates projected [PDF] of between 32% and 56% CAGR in capacity, compared to 8% in Singapore.
The booming market
According to the commercial real estate company Cushman & Wakefield, the APAC co-location market is expected to bring in revenues of around US$44 billion by 2040, divided among Japan, mainland China, Australia, Malaysia, and India, and the region will overtake the US in data centre capacity before 2030. That’s a statistic confirmed by the CBRE Trends report, which states that in the country’s most popular DC hub in North Virginia, availability remains currently at less than a single percentage point of capacity.
The challenge in creating new facilities includes sourcing their associated infrastructure, allocating necessary resources such as water for equipment cooling, and sourcing local, skilled staff. Whether the region can succeed in grabbing a significant market share globally remains to be seen.
(Image source: “Old chinese temple in Klang, Selangor, Malaysia. Balance body and mind.” by Conny Sandland is licensed under CC BY 2.0.)
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