State of the market – data centres in Asia

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  • State of the market – data centres in Asia
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Ling Lam

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Ling Lam

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Future Thinking , Market Research
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Data centre demand is expected to have a 12.2% compound annual growth between 2018 and 2024 in the APAC region.1

Big data is now central to the way we live our lives, the way our governments work, to the way we communicate, purchase and carry out day-to-day tasks. As a result, the demand for the 21st Century data centre facility is intense. In the past most data centre developments were centred in the US, the UK and Europe – notably within Frankfurt, London, Amsterdam and Paris (FLAP) – but land is scarce, logistics and materials challenging, and data centre investors and developers have turned to Asia where the market is growing exponentially.

With a population of 1.45bn2 China is home to over 18% of people on the planet and it is estimated that 920m of those in China own a mobile phone.3 Additionally, over 70% of people in China use the internet against a global average of 59%.

Changing Human Behaviour

While the adoption of technology increasingly infiltrates and influences human behaviour across the globe, in Asia the WeChat platform is a one-stop-shop for a digital life. Individuals across all ages communicate, purchase goods and services, access to entertainment, transfer money, and a lot more, in fact there are few life functions that are not influenced by the WeChat app with circa 1.23bn monthly active users.

Smart Cities and 5G

Governments too have a demand for data centre services and China leads the way in the development of Smart Cities where data-driven traffic systems detect accidents and obstructions to re-direct vehicles waste and water facilities are also optimised through digital solutions. China and South Korea also lead in the development of deployment in 5G technology.

Mainland China

At 9.3m km2 China offers the space no longer available in the saturated land masses of the FLAP countries. Local investment too from tech giants Alibaba, Tencent, China Telecom and Huawei alongside many private investors as well as public finance suggests demand is set to stay.

Hong Kong

Despite extreme scarcity of land in Hong Kong the data centre market is also booming. Financial incentives from the local government attract further investment to repurpose sites and develop these technological estates in a region where infrastructure is mature and electricity supplies are reliable and robust.

South Korea

The capital of mobile phone production, South Korea, has one of the fastest networks in the world and substantially more availability of high-speed internet than other areas. Over 92% of South Korea’s population use the internet4 and like Hong Kong the country’s infrastructure is stable. Demand for data centre development is supported both by private investors and financial institutions.

Challenges

The biggest challenge to data centre development in Asia is the energy to facilitate these centres. The sustainability agenda and the drive to achieve carbon neutral also remains a challenge but meteorological and geological factors mean the Asian market can rely on renewable energy sources to build and sustainable practices are designed for the lifecycle of the facility.

Fast and Furious

The market is adapting fast and furiously to meet demand. With this comes the challenge to find efficiencies in design and construction. Modern ways of manufacturing, particularly modular construction has led the way and many data centre builds are standardised making the construction cycle shorter and quicker. Digitisation of the sector using BIM, artificial intelligence and other advance technologies have shortened timeframes and delivered productivity and Asia has been quick to adopt this.

During the Covid-19 crisis, Europe is seeing a blip in the necessary supply chain but the Covid-impact is less in Asia. Apart from an early and relatively short lockdown in early 2020, China managed to contain the economic impact of the pandemic meaning its supply chain and material remain largely unaffected.

As technology continues to change the way we live, work and play, demand will continue in the data centre market worldwide and the emergence of opportunities across APAC will meet this demand and continue the digitisation journey for all.

RLB is a leading global construction and management consultancy specialising in data centres. Having delivered over 210 facilities worldwide with a capacity more than 1GW, RLB shares global best practice through our office network worldwide while maximising local expertise, service and delivery.