Global data centre markets – Singapore and Sydney tops ranking

Singapore and Sydney among top 5 in global data centre markets

Image credit: Cushman & Wakefield

Sydney and Singapore have been ranked among the top ten global data centre markets globally, according to Cushman & Wakefield’s 2021 Global Data Center Market Comparison report. Sydney featured as the biggest mover in overall rankings, moving up to third, while Singapore moved up one position to fifth.

Todd Olson, Cushman & Wakefield’s APAC Data Center Advisory Group Leader said, “Asia Pacific markets continue to perform well as data center destinations given its overall growth potential and the rapid development of technology platforms and networks across many of its markets. As e-commerce continues to flourish and cloud connectivity becomes a primary business driver, we expect the data center market growth to intensify in the region with secondary markets gaining prominence and new markets emerging in this space.”

Global data centre markets ranking

Global data centre markets report shows secondary markets growing in importance

“The 2020 pandemic accelerated the change in corporate IT strategy, as companies rapidly shifted to the cloud. Continuation and optimization of this shift will continue throughout the next several years, creating further emphasis on cloud services availability and connectivity across platforms,’ said Dave Fanning, Executive Managing Director, Data Center Advisory Group Leader at Cushman & Wakefield. “Construction of new product has skyrocketed, with the 1.6 GW under construction across markets studied last year swelling to 2.9 GW in this year’s edition.

Secondary markets continue to grow in importance, with areas particularly in Europe and Asia gaining interest as some workload move to the edge. These secondary locales often provide greater margins for data center operators, with some growing to primary market status in the future. In Asia Pacific in particular, markets like Chennai and Kuala Lumpur are receiving interest from operators and hyperscalers alike.

Sydney, labeled as an emerging market and alternative in last year’s ranking, moved drastically up the overall rankings to third place, capping off a year of major new development announcements and an ongoing transformation of much of Australia’s government IT infrastructure. The business capital of Australia is a key location for initial in-country cloud deployments and enjoys robust regional connectivity.

Besides Sydney and Singapore, Amsterdam has stellar performance in global data centre markets

Although Singapore and Amsterdam both have tempered data center development via local moratoriums, both still finished in the top ten, a testament to their strong existing markets, dense fiber, and array of available services. As other markets continue to grow, it will remain imperative for both markets to find solutions for future development, potentially through new forms of power generation or further multi-storey construction for the limited number of remaining development sites.

Of the new markets introduced this year, Seoul received the highest overall score, marking an impressive debut for a long-overlooked data center market. Although considered a secondary market, Seoul has nearly 300 MW of capacity, a solid development pipeline, and all major cloud services available. Well-managed cities with smaller markets such as Zurich, Melbourne, and Madrid enjoyed continued gains, suggesting growing ecosystems in secondary locations, and long-time data center stalwarts London, Tokyo, Frankfurt, Silicon Valley, and Hong Kong all remain extremely relevant.

The report by Cushman & Wakefield mirrors a recent report by JLL which said that Asia Pacific’s data centre real estate is poised to enter a new cycle of emerging market led growth. According to JLL, Asia Pacific which is home to three of the world’s four most populous countries (mainland China, India, and Indonesia), provides attractive locations and fuels a new cycle of operators and investors’ opportunities.

Surging internet usage and smartphone adoption, coupled with social media, e-gaming, video streaming, and big data applications, are all fuelling requirements for extra data centre real estate capacity across the region, said the report.

According to JLL’s recently published The Rise of New Data Centre Growth Markets demand for data centres continues to grow exponentially in Asia Pacific, fueled by cloud computing and the consumer mobile internet. The market for hosting, storage, and computing cloud services is expected to be worth USD 163 billion in 2021, which is an almost 30% increase over 2017, says the report. Additionally, cloud traffic in Asia Pacific is set to grow by more than 150% over the same period.

According to JLL, investor, and operator activities in mainland China, India, and Indonesia have grown significantly in recent months. They will further expand as demand for data centre services surges in these high-growth markets. JLL believes that all three emerging markets are currently being underserved by existing supply and facing strong demand from local and international operators.

Mainland China has more existing and upcoming supply than any other market in Asia Pacific, with significant investments and commitments announced over the past 18 months. In June 2020, Blackstone announced an investment of USD 150 million in Chinese data centre provider, 21vianet. Additionally, GDS and GIC announced a partnership in 2019 to build and operate data centres in China, signalling the market’s longer-term potential.

In India, the Adani Group has plans to invest around USD 10 billion in data parks and has inked a memorandum of understanding with the US-based Digital Realty in 201915. Colt DCS also broke ground for a new hyperscale facility in Mumbai in 2020, one of India’s most extensive hyperscale facilities. Equinix has announced its entry into India in 2020 through the acquisition of GPX India.

In Indonesia, the new INDIGO cable landing in Jakarta connecting Singapore to Sydney adds to Indonesia’s attractiveness as a data centre market. In November 2020, we saw Space DC open its first Indonesian data centre19. Separately, Keppel Group has partnered with the Salim group to develop its first data centre jointly. In contrast, the Princeton Digital Group has entered the market from its acquisition of majority stakes in XL Axiata’s data centre portfolio.

Despite the clear opportunities in the region’s emerging data centre markets, there is also a strong local component to the investment evaluation criteria, which needs to be considered. Data localisation laws and other regulations and factors such as proximity of markets served and access to power supply require a nuanced view of the sector.

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