The Asia-Pacific (APAC) region continues to be a vital hub for the global data center industry, driven by rapid digital transformation, growing cloud adoption, and the increasing demand for artificial intelligence (AI) applications. To unpack the latest developments in this fast-moving sector, datacenterHawk recently hosted a podcast featuring Dedi Iskandar, Regional Director – APAC, and Donny Gunadi, Senior Insight Analyst – APAC. Together, they provided deep insights into the APAC data center market, including emerging trends, key players, and the dynamics shaping this burgeoning industry.

A Growing Market with Global Attention

During the discussion, Donny highlighted significant developments in the APAC region over the past five years. One notable trend is the influx of Western and Chinese hyperscalers entering the market, particularly in countries like Indonesia and other Southeast Asian nations. These hyperscalers—major cloud service providers such as AWS, Microsoft, and Alibaba Cloud—are driving colocation demand and pushing the industry forward.

Interestingly, while Australia's data center market remains dominated by Western hyperscalers such as AWS and Google, countries like Indonesia have emerged as particularly attractive markets due to their large populations and increasing digital maturity. Meanwhile, AI-related requirements across the region are also ramping up, especially as both cloud providers and enterprises explore the potential of AI training and inference workloads.

Mature vs. Emerging Markets

The hosts also explored how mature markets such as Sydney, Singapore, and Tokyo differ from rapidly growing emerging markets like Bangkok, Jakarta, and Johor Bahru. Mature markets typically offer robust infrastructure, established connectivity, and higher levels of competition. These regions remain highly attractive but may face growth limitations due to high land prices and limited power availability.

On the other hand, emerging markets present unique opportunities. Regions like Jakarta and Batam have attracted significant investments, partially due to Singapore’s moratorium on new data center developments. These markets offer more affordable real estate opportunities and untapped potential, but they also come with challenges such as uneven access to power infrastructure and connectivity hurdles.

For instance, Jakarta, with its population of over 270 million, is a prime example of a fast-growing market with high demand. However, as Donny emphasized, different markets require tailored strategies based on local regulations, infrastructure maturity, and availability of land and resources.

Spotlight on Melbourne as a High-Growth Market

Among the emerging markets discussed, Melbourne stood out as a promising alternative to its larger Australian counterpart, Sydney. Despite Sydney’s position as the dominant leader in the market—being two to three times larger in scale—Melbourne offers distinct advantages. Donny identified the following factors driving Melbourne's growth:

• Comparable Population: With approximately 5–5.5 million residents, Melbourne’s population is similar to Sydney’s, making it an attractive target for data center investment.
• Affordable Land Prices: Industrial areas in Melbourne’s northwest have been effectively converted into data center campuses, offering cost advantages over Sydney.
• Emerging Connectivity: Efforts to enhance Melbourne’s telecommunication and submarine cable infrastructure are bolstering its competitiveness as a key data center hub.
• Colocation Providers and Hyperscalers: Major players like Equinix and hyperscalers such as AWS are increasing their investment in the city, adding momentum to Melbourne's rise.

This combination of factors places Melbourne as a high-potential market, particularly for data center operators looking for cost-effective entry points with long-term growth potential.

Key Considerations for Data Center Expansion in APAC

For IT professionals and investors eyeing the APAC data center space, understanding the nuances of each market is critical. Dedi shared some important factors to evaluate before making investment decisions:

1. Supply and Demand:

• Is there sufficient demand to justify new data center facilities? Metrics such as GDP growth and population size are key indicators.
• Less mature markets like Indonesia may offer rapid growth opportunities, while developed regions like Australia provide stable but slower expansion rates.

2. Infrastructure Accessibility:

• Assess the availability and cost of critical infrastructure like power, water, and telecommunications.
• Markets with limited access to power infrastructure may face higher operational challenges.

3. Connectivity:

• Data centers thrive on robust network backbone and fiber optic connectivity. Locations with established connectivity hubs are better positioned for growth and scalability.

4. Regulatory Landscape:

• Local governments often play a significant role, especially in emerging markets, where regulations and incentives can either accelerate or impede progress.

5. Power Efficiency:

• With modern applications becoming increasingly power-hungry, the cost and stability of electricity have emerged as major factors in determining viable data center locations.

Balancing Risks and Opportunities

Emerging markets often present lucrative opportunities, but they are not without risks. Investors and operators must conduct in-depth evaluations of supply-demand dynamics, infrastructure readiness, and long-term scalability before committing to new projects. Mature markets, while more predictable, tend to present higher barriers to entry due to cost and competition.

Final Thoughts

The APAC data center market is undergoing a period of dynamic growth, offering immense opportunities for businesses, investors, and IT professionals alike. Whether you are looking at mature markets like Sydney and Tokyo or evaluating emerging hubs like Jakarta and Melbourne, a clear understanding of the driving factors is crucial for success.

At datacenterHawk, we provide market intelligence to help you make better, faster decisions about data center investments and expansions across the globe. Stay ahead of the curve with our platform’s in-depth insights and trend analysis.

Are you ready to explore the expanding potential of APAC's data center markets? Visit our platform and gain full access to the latest market intelligence today.