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Data centre investment in Asia Pacific is expected to continue to grow on the back of rapid urban population growth and adoption of e-commerce in the region.
In fact, many companies in Asia Pacific are looking to rent a share of data storage facilities, rather than own an entire centre, said JLL. This means that Asia Pacific revenue for shared or co-location data centres could overtake the US as it increases to 40 percent of global share by 2020.
The Asia Pacific’s spending on public cloud services is also expected to hit US$15 billion this year as businesses shift towards storing their data on cloud services. This saw leading cloud provides like Amazon, Google, Alibaba and Microsoft compete to add cloud zones across the region.
“As the cloud market matures, organisations need to establish their infrastructure capacity quickly in order to keep up,” said Bob Tan, director of alternatives at JLL Asia Pacific. “We’re seeing more investors looking to enter or increase their exposure to the data centre sector as it offers diversification benefits and tends to have higher yields than traditional asset classes, such as office or retail.”
But while investors have preferred prime locations such as Singapore, Sydney, Tokyo and Hong Kong, cities in China, Indonesia and India are emerging hotspots due to their large population bases, high social media activity and internet penetration rates.
“In recent years, data protection and cybersecurity legislation in these markets have forced users to switch to on-shore data centres, further stoking demand,” noted Tan.
JLL added that China’s need for co-location space is anchored by the country’s rapid digital transformation, fintech growth and reliance on big data analytics.
Meanwhile, India’s large population base and state-led initiatives on digital transformation are expected to boost the public cloud service market’s growth in the country.
Indonesia’s e-commerce market, on the other hand, is expected to hit US$60 billion by 2020 on the back of increasing smartphone adoption and internet penetration in the country.
With this, Tan expects data centres to feature strongly on investors’ agendas.
“We’re confident that prospects in Asia Pacific will continue to expand, with significant capital targeting the emerging markets. Given their large market size and potential, these destinations offer strong user demand and solid growth opportunities,” he added.
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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