APAC data centre investment to hit a new record this year

The data centre investment market in APAC is expected to reach a new high this year – with $1.8 billion already invested in the first half of 2021. This amounts to 80% of 2020’s total year-long investment accomplished in just six months – leading industry experts to believe that 2021 will be a record year as well.

This information, from a market study conducted by real estate investment services firm CBRE, noted that data centre investment in APAC is being driven largely by data security and sovereignty concerns. With the China Data Security Act, companies are required to store data within the country’s borders, leading to increased investment in the construction and expansion of data centres.

In 2020, demand for data centre services was bolstered by the effects of the global pandemic. The data centre investment market in 2020 was higher than it had been for the previous five years – but in 2021, that investment growth will reach a new high point.

Lim Chin-Yee, Senior Director of Asia Pacific Data Centre Solutions for CBRE, pointed out that the current vacancy rate (hovering around 13%) acts as a healthy driver for expansion. “Operators only plan new developments when their existing assets are 60-70% occupied. A facility with an unsold capacity of 10% or less tends to be taken up by existing tenants rather than attracting new users.”

In the first half of the year, mainland China accounted for the highest proportion of data centre investment, with major deals closed including acquisitions by GDS and CapitaLand.

CBRE also noted in their report that while expansion opportunities are available all across APAC, there are continued investment opportunities across tier 1 markets. This includes Tokyo – which has the largest pipeline among the four-tier 1 APAC data centre markets over the next three years.