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Southeast Asia data center construction market to hit $5.3B by 2029

The Southeast Asia data center construction market is expected to reach a value of $5.3 billion by 2029 from $2.81 billion in 2023, growing at a CAGR of 11.18% from 2023-2029, according to Research and Markets.

The Southeast Asia data center construction market has grown significantly over the last few years with investments from several local and global data center operators. This will intensify the competition among the construction contractors and infrastructure providers. In Southeast Asia, colocation providers strategically build facilities in phases, aligning with market demand.

Looking ahead, there is an expectation for a heightened demand for power infrastructure featuring higher capacity systems in a 2N redundancy configuration across multiple facilities. Southeast Asian investors adopt various sustainable designs to ensure that the facility operates at a PUE of less than 1.5, which was not achievable by the operational data center built before 2017. The recent sustainable data center design practices are complimented by innovative air – and water-based cooling solutions, efficient power technologies, and sustainable construction practices.

The major hyperscale operators investing in the Southeast Asia data center construction market include Amazon Web Services (AWS), Microsoft, Meta (Facebook), and Google. Adopting direct-to-chip and immersion cooling solutions will witness a marked increase across newly built data centers in Southeast Asia to support the deployment of AI workloads. These cutting-edge cooling techniques enhance efficiency and superior thermal management, decreasing energy usage and heightening overall performance.

The Southeast Asian data center construction market has witnessed a significant increase in new entrants in the last few years, owing to its strong growth potential. The increase in new entrants will increase the competition for the existing data center operators, expanding their presence across countries. In Southeast Asia, the average land cost ranges from $10 to $25 per square foot. Regarding land acquisition costs, Malaysia and Vietnam are notable for their affordability, followed by countries like Indonesia, Thailand, and others, while Singapore stands out as the most expensive. Despite this, Vietnam, Indonesia, and the Philippines are witnessing significant digital activities such as e-commerce growth, government-led digitalization initiatives, and AI adoption.

The presence of approximately 140 submarine cables in Southeast Asia and the ongoing development of over 41 new ones point to a growing emphasis on factors such as AI development, digitization, and the escalating volume of data stored within the region. This trend is expected to drive increased investments in the Southeast Asia data center construction market in the foreseeable future.

In Southeast Asia, major cities such as Batam, Bekasi, Jakarta, Johor, West Java, Cyberjaya, Manila, Chon Buri, Ho Chi Minh City, and Bangkok collectively account for over 60% of the total data center capacity in the region. However, other cities are steadily narrowing this gap. Increased investments in data centers are anticipated to flow into these cities, driven by regulatory policies, the formation of data center clusters, and incentives such as low-cost labor and affordable land prices. Research and Markets.

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