APAC Is Global Investment Destination for Data Centres

Asia-Pacific (APAC) has emerged as the leading global investment destination for data centres capturing $15.5 billion in 2024, more than any other region worldwide, and accounted for 70% of cross-border investment, according to a leading global real estate adviser Knight Frank.

This influx of investment demonstrates APAC’s growing strategic importance in the global digital infrastructure landscape, Knight Frank said.

Building on this investment momentum, APAC is forecast to add a little over 4.17 GW of capacity (a 32% increase) by 2027, supported by planned investments totalling $58.7 billion over this two-year period.

In its latest Global Data Centres Report, Knight Frank has projected the market growth at a compound annual growth rate (CAGR) of 18% over the next five years, with the market expected to reach $4 trillion by 2030.

The analysis forecasts capital expenditure exceeding $286 billion by 2027 as operators respond to mounting demand for AI-optimised infrastructure, cloud services, and enterprise digital initiatives. The research examines critical factors shaping data centre capacity planning and operational strategies across global markets.

The global data centre capacity is projected to increase by 46% over the next two years, adding approximately 20.83 GW. By 2030, capacity could expand by 177%, driven by escalating demand for AI and enterprise digital transformation.

The transaction volumes, which decreased 36% in 2023 due to global interest rate hikes, rebounded strongly in 2024 as the global transaction volumes grew 118% to reach $31.8 billion across single-asset purchases, portfolio acquisitions, redevelopment opportunities, and development site sales.

Globally, the average real estate transaction value for data centres rose to $75.4 million in 2024, up 15% from 2023 and 44% higher than pre-COVID levels in 2019. Since 2019, average transaction values have grown at a CAGR of 7.5%.

Data Centre Markets in APAC

Mumbai: AWS has transformed Mumbai’s data centre market by scaling through colocation rather than self-building. Instead of acquiring land and constructing its own facilities, AWS is leasing large amounts of capacity from third-party operators. This approach has made Mumbai one of the most competitive leasing markets in APAC.

Tokyo: This key APAC hub is poised for 25% capacity growth (295 MW) over the next two years, supported by $4.1 billion in investment. Japan’s strategic location, stable power infrastructure, and expanding cloud service requirements continue to drive steady market development despite land constraints.

Johor: Positioned for significant expansion with 85% capacity growth (335 MW) over the next two years, backed by $4.7 billion in investment. Johor’s strategic location adjacent to Singapore, coupled with favourable government incentives and lower operational costs, establishes it as a viable alternative for hyperscale expansion.

Melbourne: A major shift towards ultra-high-density deployments is redefining the city’s data centre landscape. AI workloads require significantly more power, pushing rack densities from 30kW to 40kW to over 80kW. This has intensified competition for high-density-ready colocation space, with operators racing to integrate liquid cooling and power distribution upgrades.

Singapore: With vacancy rates below 1%, the main liquidity of transactions has shifted towards smaller rack deals despite Singapore’s standing as a large-scale market. These fractional capacity deals have surged in pricing, with some operators securing pricing exceeding $1,000. Investors and operators continue to recognise the profitability of these small-scale transactions, with colocation providers rapidly leasing out available capacity at premium prices.

Bangkok: With land and power costs significantly lower than in other Tier 1 APAC cities, hyperscalers can achieve rapid deployment while maintaining operational control. However, despite the market’s potential to become a gigawatt-scale hub, the extent to which colocation will play a role remains uncertain.

Stephen Beard, Global Head of Data Centres at Knight Frank said that the global data centre industry was undergoing rapid transformation, with hyperscaler and colocation providers prioritising markets that offer access to power, robust connectivity, and a favourable regulatory environment.

They were increasingly seeing sustainability considerations shaping investment strategies, with an increasing focus on renewable energy adoption and energy-efficient design, he said.

Fred Fitzalan-Howard, Head of Data Centres, APAC, Knight Frank, said that the region’s data centre market is positioned for substantial growth, driven by increasing investor interest across both tier 1 and emerging tier 2 markets.

Over the next three years, the APAC data centre market is expected to add approximately 8 GW of new capacity, with 25% dedicated to AI workloads, lower than the global average due to the region’s Tier 2 or Tier 3 status under U.S. AI diffusion rules.

This rollout represents a capital expenditure of $24 billion and a real estate requirement of 20 to 30 million sq. ft. While AI deployments in APAC are still in their early stages compared with the US and Europe, the region presents significant opportunities for growth, he said.