Singapore still APAC's most competitive data centre market: report

The city ranks as the region's preferred location due to high-speed connectivity and low risk of natural disasters.

Singapore maintained its spot as the most competitive data centre market in Asia Pacific (APAC) for the third straight year, according to a report by Cushman & Wakefield, beating Hong Kong.

Also read: Data centre operators turn West amidst Tai Seng space crunch

Globally, the island nation jumped four places to clinch the third spot behind Iceland and Norway and ahead of major economies such as the United States (7th), Hong Kong (9th), United Kingdom (10th), and Germany (17th).

“Singapore’s rise in the global index comes on the back of its improved high-speed connectivity, political stability and low risk of natural disasters relative to other countries. Being sheltered from natural disasters and robust infrastructure, many content operators continue to take advantage of Singapore’s prime geographical location to service their regional clients in Malaysia, Indonesia and Thailand,” the report said.

Also read: Can Singapore cement its data centre dominance before Asian upstarts steal crown?

The index identifies the top competitive factors such as connectivity, ease of doing business, political stability, corporate tax rate, natural disasters, energy and security that are likely to affect the successful operation of a data centre. Countries and cities are assigned scores based on the weightage allocated to each of the factors.

Singapore has attracted a number of tech companies to set up data centres. Most notable is Facebook with its $1.39b data centre, its first in Asia. Other companies include Equinix, Digital Realty, and ST Telemedia; whilst at least two other operators, including Google, have successfully tendered for land plots from Jurong Town Corporation to build data centres.

Overall, APAC was the second-fastest growing market in terms of digitisation and co-location data centres worldwide and is expected to grow steadily at around 12% by a compounded annual growth rate (CAGR) between 2019 and 2024.

Also read: Asia Pacific soon to be home to 40% of the world data centers: report

C&W noted that although other APAC countries such as Malaysia, Indonesia, Thailand and Vietnam ranked relatively lower in the risk index, their potential commercial upside for data centre players is significant.

Lynus Pook, director of Leasing at C&W said, “The economically active population in the Southeast Asian markets of Indonesia and Vietnam will spur increased IT consumption and explosive growth in e-commerce and digital banking. Demand for data storage across SEA holds tremendous potential for data centre players.”

“Still, the infrastructure in these markets is not fully developed, posing some challenges for data centre providers. As such, well-located data centres that are built with redundancies will therefore be in short supply and in high demand. Data centre service providers should weigh the commercial opportunities against the risks and put in place appropriate measures to mitigate and manage risks accordingly,” Pook added.

A study by Google and Temasek Holdings approximated that Southeast Asia’s (SEA) internet economy will expand expeditiously to a $332.7b by 2025 from only $99.81b last year driven by mobile internet services. With the introduction of 5G networks across the world, which is 20x faster than 4G, C&W expects a spur on massive consumption and new capabilities such as self-driving cars, cloud gaming and a thriving ecosystem of smart appliances that require constant connection.

In APAC, Singapore is one of the early adopters of 5G and is on track to roll out 5G mobile networks by 2020.

“Until the levels of infrastructure in the emerging markets of Thailand, Indonesia and Vietnam are sophisticated enough to support the smooth operation of data centres in these markets, data centre players will continue to leverage the twin strengths of Singapore and the emerging markets of Southeast Asia to navigate the next wave of data centre development,” said Christine Li, C&W's head of research for SEA.

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