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With Asia Pacific’s data centre market expected to increase by 27 percent annually, more companies are turning to Singapore for data centre storage and cloud leasing.
This comes after Facebook and Google decided to set up data centres in the city-state.
When it comes to data centres, Singapore is one of the region’s “Big Four” along with Hong Kong, Tokyo and Sydney.
Although both the city-state and Hong Kong are popular among companies planning to set up headquarters, Singapore “has an edge with its stable geopolitical climate, supportive regulatory environment and relatively cheaper land costs”, said Bob Tan, director of alternatives for Asia Pacific capital markets at JLL.
“The Singapore government has also prioritised diversity of locations and greenfield availability for data centres, allowing the market to evolve and meet demand.”
But while the city-state continues to be a firm favourite for data centres, the chronic scarcity of land, higher labour and operational costs pose a challenge for some firms.
“Singapore also faces competition from emerging South-east Asian markets such as Indonesia, Malaysia and Thailand, which have been improving their infrastructure amid the fourth industrial revolution taking place today.”
Some firms have turned to India, China and Indonesia following changes to cybersecurity and data protection laws, while being attracted to the large population of these markets. Indonesia, for instance, requires domestic banks to store customer data locally as of October last year.
Nonetheless, JLL believes that Singapore’s data centre market remains promising.
“Although Facebook and Google have chosen to develop their own data centres, some single users or operators prefer to undertake a Build-to-Suit lease arrangement, whereby the propco investor will provide the land, and typically a powered core and shell build,” said Tan.
“The appeal lies in the user having full operational control, a customised base build, and ability to scale over time.”
Such arrangements have been trending over the past few years, as seen in Jurong DC Park (Tanjong Kling Park).
“We are likely to see more of such arrangements adopted in the central and east districts of Singapore in the years ahead. Following the record-breaking supply of data centres in 2016/2017, we are likely to see the market remain stable as absorption catches up.”
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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