Asia-Pacific Data Center Construction Market Outlook Report 2023-2028: Burgeoning Opportunities with Edge Data Center Deployments Fueled by 5G Investments

Rhea-AI Summary

The APAC data center construction market is projected to grow from $15.17 billion in 2022 to $24.17 billion by 2028, at a CAGR of 8.07%. This growth is driven by governmental support, industrial zone development, and significant investments from cloud service providers. Emerging markets like the Philippines and Vietnam are also attracting interest. Operators are increasingly adopting renewable energy solutions. The deployment of 5G and rising digitalization are key trends, while M&As are boosting market growth. Major players include Chindata Group (CD), Sify Technologies (SIFY), and VNET. Infrastructure advancements are expected as well.

Positive

• Projected market growth from $15.17 billion in 2022 to $24.17 billion by 2028 at a CAGR of 8.07%
• Increased government support and investments from cloud service providers
• Emerging markets like the Philippines and Vietnam attracting data center operators
• Growing adoption of renewable energy by data center operators
• 5G deployment driving investment in edge data centers

Negative

• Challenges related to data center security
• Lack of skilled professionals in the data center sector
• Potential power and network outages affecting data center operations

DUBLIN, March 20, 2023 /PRNewswire/ -- The "APAC Data Center Construction Market - Industry Outlook & Forecast 2023-2028" report has been added to ResearchAndMarkets.com's offering.

The APAC data center construction market is expected reach a value of $24.17 billion by 2028 from $15.17 billion in 2022, growing at a CAGR of 8.07% from 2022 to 2028

The region's market is among the majorly growing markets across the globe, led by factors such as governments across countries supporting data centers, development of multiple industrial zones, rapid growth in submarine cable connectivity, significant investments from cloud service providers, entry of global colocation operators in the region in joint ventures and other factors.

The growing potential of the market has led data center operators to show interest in some other emerging markets in the region, such as the Philippines, Vietnam, New Zealand, and others.

Data center operators in the region are also participating in the government's efforts for sustainable energy adoption by using renewable energy, signing power purchase agreements, or setting targets for carbon-free operations. For instance, in August 2022, Microsoft announced a partnership with Ecotricity to power its data center region in New Zealand with 100% renewable energy.

KEY HIGHLIGHTS

The deployment of 5G service and the growing demand for connectivity in new locations and tier 1 and tier 2 cities across multiple countries has significantly attracted investments from edge data center operators. For instance, edge operators such as EdgeConneX, Digital Edge, Leading Edge Data Centres, and Edge Centres are actively investing in establishing multiple edge data centers across countries such as Indonesia, Australia, Malaysia, Philippines, Thailand, India, Vietnam, Thailand, and others.

The region has witnessed a growing interest by governments and operators in renewable energy. Almost all governments across all countries have taken up initiatives to promote the adoption of renewable energy sources. For instance, Taiwan aims to generate 20% of its electricity through renewable energy by 2025 via wind and solar PV promotion plans. Renewable power capacity is expected to reach over 26 GW within the next five years in Taiwan.

The APAC data center construction market has been growing significantly in terms of connectivity owing to the deployment of several upcoming submarine cables such as Asia Link Cable, SEA-H2X, Asia Connect Cable-1, Hawaiki Nui, 2Africa, and others.

KEY TRENDS

Growing Digitalization in the Region

Digitalization has been growing as a major agenda by governments across all countries, such as Malaysia, Thailand, India, Australia, Japan, South Korea, China, New Zealand, and others. Several Governments are announcing their digital strategies to strengthen the digital growth of respective markets. For instance, the Government of Australia has launched its Digital Economy Strategy 2022 Update with the aim for the development of the digital economy of Australia by 2030.

Growing Mergers & Acquisitions and Joint Ventures

The significant growth potential and revenue-generating opportunities in the APAC data center construction market are prompting operators to continuously invest in merger & acquisition deals and sign joint ventures for data center projects. Several global organizations are entering the market through joint ventures. For instance, STACK Infrastructure entered the South Korean market in a joint venture with ESR Cayman to develop a data center.

SEGMENTATION INSIGHTS

The development of colocation data centers dominates the APAC data center construction market in terms of the number of investments. Several new entrants are entering the market for the development of colocation data centers, and hyperscale operators are also increasing their market presence with investment in cloud regions. Some countries, such as Indonesia, Australia, and Myanmar, also witnessed investments in enterprise data centers in 2022.

Regarding electrical infrastructure, the APAC data center construction market has strong growth potential for lithium-ion and nickel-zinc batteries for UPS systems. Operators can also adopt new-age generator sets that run on fuel types such as hydrotreated vegetable oil (HVO), natural gas, and others.

The APAC data center construction market has adopted air- and water-based cooling solutions in terms of cooling infrastructure. Especially in Southeast Asia, operators are more tilted towards adopting water-based cooling solutions due to the tropical climate. Also, the market has an opportunity for rack infrastructure vendors with the growing adoption of racks between the height range 42U to 52U. Some locations also witness the adoption of racks below 42U height.

GEOGRAPHICAL ANALYSIS

China has been dominating the APAC data center construction market in the region. Followed by markets such as India, Australia, Japan, India, Singapore, and Hong Kong, among the other major markets for facilities development in APAC.

The market for data center development in Hong Kong is also aided by growing demand for data storage in Hong Kong due to The Personal Data Ordinance that mandates organizations to store data within Hong Kong borders.

High levels of digitalization in New Zealand, especially with 5G coming into play, will contribute to a surge in data generation and generate data traffic and storage and computation requirements, which will lead to a rise in demand for data centers in the country. Several cloud service providers will likely develop cloud regions to increase their reach in the country.

Other markets such as South Korea, Taiwan, Indonesia, and Malaysia are also emerging markets, witnessing significant growth, especially as a result of digitalization and growth in connectivity. Countries such as the Philippines, New Zealand, and Vietnam have started witnessing new investments and are expected to grow as unique preferences from data center operators.

In Southeast Asia, Singapore has been a major shareholder in the overall investments in the APAC data center construction market. Although, due to the moratorium, the investments slowed down but are expected to slowly gain pace in the coming 2-3 years with the expected increase in project announcements after lifting the moratorium in 2022.

VENDOR LANDSCAPE

The APAC data center construction market has the presence of several global and local construction contractors. AECOM, Arup, Aurecon, CSF Group, DSCO Group, Gammon Construction, Larsen & Toubro, NTT Facilities Group, PM Group, Powerware Systems, Red Engineering, DPR Construction, ISG, Kienta Engineering, Rider Levett Bucknall, Turner & Townsend and others are offering their services for data center development in the region.

The APAC data center construction market, in terms of support infrastructure vendors, has several global vendors. ABB, Airedale, Caterpillar, Cummins, Delta Electronics, Eaton, HITEC Power Protection, Airedale, Trane, Siemens, KOHLER Power, Legrand, Piller Power Systems, Rolls-Royce, Rittal, STULZ, Green Revolution Cooling, Mitsubishi Electric, Schneider Electric, Vertiv, and others are offering traditional as well as innovating data center solutions in the industry.

The market has been growing with a strong presence of several local and global colocation and cloud operators such as AirTrunk, Digital Realty, Equinix, GDS Services, Keppel Data Centres, NTT Global Data Centers, NEXTDC, BDx, Chayora, Chindata Group, Princeton Digital Group, SpaceDC, and others.

The growing opportunities and demand in the industry have also attracted several new entrants, including AdaniConneX, Evolution Data Centres, Data Center First, MettaDC, Hickory, Vantage Data Centers, YCO Cloud, and Yondr.

Initiatives such as Open Compute Project are expected to bring several new cooling techniques and technologies to the market, thereby creating more competition among vendors. Operators also look for vendors providing systems with real-time monitoring and management solutions.

Market Dynamics

Market Opportunities & Trends

• Increased Digitalization
• Edge Data Center Deployment Fueled by 5G Investments
• Adoption of Artificial Intelligence
• Adoption of Big Data & Internet of Things

Market Growth Enablers

• Rise in M&As & Jvs
• Incentives for Data Center Construction
• Growth in Adoption of Renewable Energy
• Increased Submarine Cable & Inland Connectivity

Market Restraints

• Data Center Security Challenges
• Lack of Skilled Data Center Professionals
• Data Center Power & Network Outage Challenges

Data Center Design Certifications

• Uptime Institute Tier Standards
• Leed Certification
• Tia 942 Certification

Major Vendors

Key Construction Contractors

• AECOM
• Arup
• Aurecon Group
• CSF Group
• DSCO Group
• Gammon Construction
• Larsen & Toubro (L&T)
• NTT Facilities
• PM Group
• Studio One Design

Other Prominent Construction Contractors

• AWP Architects
• BYME Engineering
• Chung Hing Engineers Group
• Corgan
• CTCI
• DPR Construction
• Faithful+Gould
• Fortis Construction
• Hutchinson Builders
• ISG
• Kienta Engineering Construction
• Linesight
• LSK Engineering
• M+W Group
• Nakano Corporation
• Obayashi Corporation
• Powerware Systems (PWS)
• Sato Kogyo
• Sterling and Wilson
• Red Engineering
• Rider Levett Bucknall
• Turner & Townsend

Prominent Support Infrastructure Vendors

• ABB
• Caterpillar
• Cummins
• Eaton
• Rittal
• Schneider Electric
• STULZ
• Vertiv

Other Prominent Support Infrastructure Vendors

• Airedale
• Alfa Laval
• Canovate
• Cyber Power Systems
• Delta Electronics
• EAE
• Fuji Electric
• Green Revolution Cooling (GRC)
• HITEC Power Protection
• KOHLER Power
• Legrand
• Mitsubishi Electric
• Narada
• Piller Power Systems
• Rolls-Royce
• Shenzhen Envicool Technology
• Siemens
• Socomec
• Trane

Prominent Data Center Investors

• AirTrunk
• Amazon Web Services (AWS)
• Digital Realty
• Equinix
• GDS Services
• Keppel Data Centres
• NTT Global Data Centers
• NEXTDC
• ST Telemedia Global Data Centres

Other Prominent Data Center Investors

• Bridge Data Centres
• Big Data Exchange (BDx)
• CDC Data Centres
• Chayora
• Chindata Group
• Colt Data Centre Services
• CtrlS Datacenters
• Digital Edge DC
• Facebook (Meta)
• Google
• Huawei Technologies
• Iron Mountain
• LG Uplus
• Microsoft
• Nxtra by Airtel
• OneAsia Network
• Open DC
• Pi Datacenters
• Princeton Digital Group (PDG)
• Regal Orion
• SpaceDC
• SUNeVison Holdings (iAdvantage)
• Sify Technologies
• Tenglong Holding Group
• Viettel IDC
• VNET
• Yotta Infrastructure Solutions

New Entrants

• AdaniConneX
• Data Center First
• Edge Centres
• EdgeConneX
• Evolution Data Centres
• Hickory
• MettaDC
• Nautilus Data Technologies
• Pure Data Centres Group
• Vantage Data Centers
• YCO Cloud
• YTL Data Center
• Yondr

For more information about this report visit https://www.researchandmarkets.com/r/gzz24s

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FAQ

What is the projected growth of the APAC data center construction market from 2022 to 2028?

The market is projected to grow from $15.17 billion in 2022 to $24.17 billion by 2028, at a CAGR of 8.07%.

Which companies are significant players in the APAC data center construction market?

Major players include Chindata Group (CD), Sify Technologies (SIFY), and VNET.

What role does 5G play in the APAC data center construction market?

The deployment of 5G significantly drives investments in edge data centers across the region.

What are the key trends influencing the APAC data center construction market?

Key trends include growing digitalization, increased renewable energy adoption, and significant M&A activity.

What challenges does the APAC data center construction market face?

Challenges include data center security issues, a lack of skilled professionals, and potential network outages.