Increased demand in the future of Malaysia data centre market, JLL reports

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KUALA LUMPUR: Increased usage of cloud computing and artificial intelligence (AI) is driving growth for the data centre sector, according to JLL’s new Global Data Centre Outlook.

Hyperscalers, which are predominantly global cloud service providers, and edge data centres, which are smaller facilities located close to the populations and infrastructure they serve, account for 79% of overall demand, creating the fastest-growing sector of the market. 

The former is expected to grow 20% from 2021 to 2026 as more tech companies look to meet surging demand for data processing and storage requirements because of the sustained social media usage in China and India. These countries boast 938 million users and 467 million users respectively.

As of today, the regional hub status of Tokyo, Hong Kong, Singapore, and Sydney remain sound, with a combined 3,000MW of total inventory and 765MW under construction. However, enterprises are increasingly considering other hubs and edge markets, including Jakarta and Mumbai, due to growing mobile phone usage.

“Just five years ago, campus build sizes were commonly around 50MW. Today, it is not uncommon to see builds of 100MW or more. Asia Pacific currently makes up 26% share of global hyperscale data centre capacity in 2022. In mature markets like Singapore, Hong Kong, Tokyo, Shanghai and Sydney, we are witnessing a huge gap in capacity, and they are being bridged quickly with large new builds,” JLL Asia Pacific data centres head managing director Christopher Street said.

“Furthermore, emerging edge markets are receiving strong interest from cloud providers and hyperscalers. Given the region’s influence in the global economy, a significant opportunity now exists in this market,” Street added.

JLL’s report outlined Malaysia as an emerging regional data centre destination and an attractive investment destination, due to its expanded digital infrastructure investments, consisting of cable landing stations, additional undersea cables, 5G and better fibre connectivity.

Current preferred locations are Selangor and Johor, with the northern states of Penang and Kedah and Sarawak in East Malaysia as possible alternatives.

Despite the lack of readiness for key utilities, supply chain challenges and geopolitical tensions, the influx of data centre investments in Malaysia had led to an increased need for utility service providers to keep up with demand, requiring larger capex investment. 

According to JLL, Malaysian utility providers have been able to adequately meet the demands of new DC investments. Prime Minister Datuk Sri Anwar Ibrahim similarly acknowledged the importance of infrastructure readiness to receive foreign investments into the country. This comes on the heels of the Minister of Transport’s recent announcement of his intended meeting with tech giants to discuss cabotage policy restrictions for submarine cable repair. These developments bode well for Malaysia’s tech and DC sectors.


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