Despite strict land and power restrictions on new data centre (DC) infrastructure, Singapore has become the fifth market in Asia Pacific (Apac) to surpass 1,000 megawatts (MW) or 1 gigawatt (GW) of operational capacity. According to a market report by Cushman & Wakefield (C&W), the island added 31MW of supply last year, pushing it past the threshold.
The city-state joins a small list of Apac countries with DC operational capacity exceeding 1GW. Singapore now has the fifth largest overall capacity, behind mainland China (4.5GW), Japan (1.5GW), Australia (1.3GW) and India (1.3GW).
According to C&W, about 1,622MW of new capacity went live in the region last year. This brings Apac’s total capacity to 12.2GW, with an additional 3.1GW currently under construction and a further 11.3GW under planning.
Apac’s growing DC capacity reflects heightened demand fuelled by the rollout of 5G deployments and the shutdown of legacy 2G and 3G telecommunications networks, the rising adoption of the Internet of Things (IoT), and the development of artificial intelligence (AI) technology, among other factors.
However, Apac remains significantly undersupplied, says Pritesh Swamy, head of research and insights for C&W’s data centre group in the Asia Pacific. “For comparison, the US as a single market has 20.5GW of operational capacity and 52.5GW in the development pipeline,” he adds.
Given Apac’s size and population, Swamy believes the region’s DC needs remain under-serviced, offering significant headroom for growth.
Growing need for capacity
Currently, mainland China, Japan, Australia, India and Singapore account for nearly 80% of the region’s operational capacity. According to Swamy, DCs remain concentrated in these countries due the myriad of infrastructure, energy and regulatory requirements needed to support data centre development.
These include specialised infrastructure such as undersea and terrestrial cable networks, along with a stable supply of power and water for sustained operations. Geo-political factors, local land regulations and a country’s economic development policies can also impact development.
It is little wonder, then, that the biggest DC markets in Apac are located in the region’s economic powerhouses. According to C&W’s report, Beijing, Tokyo, Shanghai, Sydney and Mumbai accounted for 48% of total operational capacity as of the end of 2024.
Nonetheless, more DC hubs are emerging in the region, as continued digitisation among governments and private enterprises bolster cloud adoption in Apac, thus increasing demand for data centres. As lower latency becomes a higher priority, more businesses are likely to seek out data centres located close to end-users, adds Swamy.
The introduction of data sovereignty frameworks may also drive the development of more DCs across Apac. “Several governments have introduced data sovereignty laws that require the data to be stored and processed within the respective countries,” Swamy adds.
Locations of data centres in Singapore (Source: Cushman & Wakefield)
Restricted growth in Singapore
Growth in Singapore’s DC landscape has slowed following a pause in new developments. A three-year moratorium was implemented on new construction between 2019 and 2022, with the government citing the need to find a more sustainable way to develop DCs.
“Almost all of Singapore’s operational capacity was added prior to the moratorium,” says Swamy. This has made the asset class highly sought after by end-users, with Singapore DCs currently logging a vacancy rate of 2% — one of the lowest in the region, notes C&W.
In 2022, the moratorium was lifted, albeit with stricter conditions for new DCs, including a cap on the number of new projects and efficiency requirements. Since then, a select number of permits have been awarded to companies such as Equinix, Microsoft, GDS Holdings and a consortium between AirTrunk and ByteDance to build new data centres.
In May 2024, the government announced plans to release 300MW of power allocation for DCs under the Green Data Centre Roadmap. However, the official release date for the sites remains uncertain, says C&W.
Nonetheless, the report adds that operators are actively preparing their bid strategies in anticipation, focusing on renewable energy sourcing, sustainability measures and efficient building design to optimise power and water usage.
Meanwhile, the limited new supply has also prompted a number of data centre deals in the past year. In November 2024, a 60:40 joint venture between Keppel and Cuscaden Peak Investments agreed to sell two DCs, Keppel DC Singapore 7 and Keppel DC Singapore 8, to SGX-listed Keppel DC REIT for $1.38 billion. It was the third-largest capital markets transaction recorded last year.
Other deals include the sale of a OneTen Paya Lebar, freehold data centre on Paya Lebar Road, by Hwa Hong Corporation for $140 million, and the sale of Yahoo’s Singapore data centre to Princeton Digital Group for an undisclosed amount.
Opportunity for growth in JS-SEZ
On Jan 7, Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong and Malaysia’s Minister of Economy Rafizi Ramli signed an agreement on the Johor-Singapore Special Economic Zone (JS-SEZ). With the JS-SEZ expected to offer benefits such as tax incentives for corporate entities and its employees, it could be seen as an opportunity for both countries to build their DC capacity.
Already, Johor stands out as the fastest-growing DC market in the Apac region, according to C&W. “Johor has long benefitted from its proximity to Singapore, capturing almost all its spillover demand,” the report adds.
The southern Malaysian state added over 300 MW of new capacity over the last 12 months, a 330% y-o-y increase. Currently, it has 401MW of DC capacity in operation with a further 1,046MW in the development pipeline.
Locations of data centres in Johor Baharu (Source: Cushman & Wakefield)
Within Johor, Sedenak Tech Park, one of the regions named in the JS-SEZ, was identified as one of the most sought-after locations for DC operators. It accounts for 53% of the state’s current operational capacity. Pulai has also emerged as another hub, with over half of the upcoming pipeline concentrated in the area.
Swamy believes that current power restrictions for DCs in Singapore, coupled with resilient data centre demand and the incentives outlined for the JS-SEZ, could see the latter emerge as the preferred location for end-users.
He foresees no major restrictions to operators expanding into the market. “However, with extensive land parcels already acquired for data centre development in Johor, this could put pressure on the state’s power grid until the state government augments power supply in the region,” he adds.
