[Singapore] Emerging markets in Asia, particularly Malaysia and India, are poised to benefit significantly from a surge in foreign direct investment (FDI) in data centres.
This growth is driven by increased demand for data storage and cloud computing, alongside supportive government policies and resource availability, based on a Barclays Research report released on Wednesday (Jun 25).
The estimated annual FDI in data centres in Asia-Pacific is expected to reach US$62 billion annually by 2030, up from about US$35 billion in 2024.
The growth impact of this expected rise in investment in the region is likely to be staggered over time and across countries, with countries such as India and Malaysia garnering the most initial investment, said the report.
While India is likely to have the largest data centre capacity in the region by the end of the decade and account for a majority of investments, the size of the sector relative to its economy is smaller compared with others in Apac. Hence, the headline growth impact is likely to be limited.
Malaysia’s data centre investments are projected to rise to US$12 billion by 2030, the report said.
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“As a percentage of gross domestic product, we think Malaysia will be the biggest beneficiary by the end of the decade, with a bump-up in FDI of potentially 0.4 per cent of GDP from current levels,” said the analysts.
Factors driving data centre demand
Increased demand for data and the rise of cloud computing are driving the demand for data centres across Apac.
But they are also extremely power and water-intensive, using up much of such resources.
This greater need for land, energy and resources is pushing investors to seek more cost-effective destinations within the region, making it an increasingly attractive alternative to traditional markets such as the US.
Barclays noted that Apac is becoming more attractive as an alternative, with its share of global data centre FDI rising to 36 per cent from 29 per cent over the past decade.
The rise of artificial intelligence (AI) and cloud computing use has accelerated the demand for data centres in recent years.
Compared with traditional data centres, AI-driven data centres require greater power availability, higher rack densities and more advanced cooling technologies to process these high-density workloads. The increasing energy efficiency of AI models also creates more demand for AI computing, further driving demand for data centres.
The bank said that Apac data centres are booming, and in terms of operational capacity, Apac is highlighted for the “largest addition of scale in recent times”.
“With a heavy development pipeline of new projects, reflective of investor optimism and confidence, the nascent nature of the industry and the growth outlook of Apac have driven increased investments into the region,” it added.
