Data Centres

Sections: Overview Project activity Key considerations

Data Centres

Sections: Overview Project activity Key considerations

Investments in water and power infrastructure across the region will have a major impact on data centre planning, supporting expanding digital and technology needs with reliable energy provisions.

Brian Coyle Regional Director, ANZ

Overview

APAC and GCC are experiencing a surge in data centre investment fueled by AI, cloud demand and digital transformation.

The APAC region is experiencing a surge in data centre investments, fuelled by rapid AI adoption, widespread 5G rollout, digital transformation, and growing cloud demand. As of February 2025, seven of the top ten countries by 5G Standalone (SA) reach were in Asia Pacific, with India at 51% and Singapore at 37%.¹ In 2024, the region posted the highest global data centre deal value, securing four of the year’s ten largest transactions.² Analyst firm IDC estimates that, data centre capacity in APAC (excluding Japan) is projected to grow at a CAGR of 14.2% between 2024 and 2028 and reach 94.4 GW by 2028.³ APAC markets, including Japan, Singapore and Australia, are among the top 20 markets in both AI readiness and digital infrastructure.

Meanwhile, the Middle East is also gaining momentum, with data centre capacity to triple to 3.3 GW over the next 5 years.⁴ However power is one of the top concerns for data centre growth, especially for AI workloads. Availability of reliable, affordable power, with a clear path for future capacity growth is critical to AI data centre success. As AI workloads are less latency-sensitive compared to other data centre applications, operators are increasingly exploring emerging markets where power economics are more favourable.

Data centre demand in the region is rapidly evolving. The initial AI surge, driven by generative models, is now giving way to more advanced systems like Agentic AI and multimodal architectures, pushing requirements for higher computer density. At the same time, breakthroughs with newer AI players are signalling a shift toward more energy-efficient models, which could help commoditise AI and fuel the next wave of growth. The recent pause by hyperscalers, marks a strategic shift, from speculative buildouts to demand-driven, power-optimised deployments aligned with evolving AI workloads. While early-stage investments may see a temporary slowdown, the fundamentals for APAC remain strong.

The GCC market is also rapidly evolving in the digital infrastructure landscape. The KSA and the UAE remain at the forefront, driving large-scale hyperscale investments and government-backed digital initiatives.

Power and energy trends in data centres across APAC and GCC

The growing demand for data centres is reshaping energy strategies. Countries are increasingly turning to renewable energy to support expanding digital infrastructure, though energy reliability varies significantly by region.

APAC Highlights

Australia: Power purchase agreements (PPAs) for renewables are rising, but fossil fuels still dominate. While metro areas have stable power, remote regions face outages.

Taiwan: Corporate PPAs (CPPAs) are growing rapidly, with green electricity demand increasing by 30% in 2024 as compared to previous year.⁵

Singapore: Green Plan 2030 targets 2 GWp of solar and low-emission technologies to meet rising energy needs.⁶

India: Ambitious goal of 50% installed capacity from non-fossil sources by 2030, backed by 500 GW of renewable projects.⁷

Japan: Major renewable shift by 2040, encouraging data centres to invest in solar and other green energy.⁸

GCC: The GCC offers cost-effective electricity, especially in the KSA and the UAE, making it an attractive hub for energy-intensive AI-driven data centres. Expanding renewable energy projects further strengthen the region's appeal for digital infrastructure investment.

Redesigning for AI: Cooling technologies

As AI workloads continue to expand in scale and complexity, the demand for efficient and sustainable cooling solutions is accelerating. While several advanced technologies are currently in pilot or early-stage deployments, others are beginning to demonstrate strong potential for broader adoption. With a number of emerging cooling technologies being incorporated in data centre designs, such as Air Assisted Liquid Cooling and Two Phase Liquid Immersion Cooling, with clear sustainability benefits, there is a varied degree of readiness in the market to support adoption in projects.

This AI evolution is reshaping data centre design across the Asia-Pacific region. Notably, facilities originally intended for traditional cloud computing are increasingly being explored to be redesigned to support both cloud and AI applications. However, retrofitting an existing data centre for AI workload is very complex, and costly. Most legacy data centres were built for 4–6 kW per rack density, while AI workloads demand over 50 kW per rack, requiring major upgrades to power, cooling, and structural systems. Traditional electrical and HVAC setups can’t handle the load, and integrating liquid cooling, CDUs, and dense power distribution adds more complexity. Networking also needs an overhaul to support the requirements of the GPUs.

The triple push - ESG mandates, regulatory landscape, and AI demands fuel data centre sustainability

As data centre operators across APAC accelerate sustainability efforts to meet ESG goals, regulatory policies are emerging as a key driver. In emerging economies and energy import-reliant countries, renewable energy adoption is not only driven by rising AI demand, but also by the need for power reliability, making energy infrastructure a strategic priority. In Japan, a floating offshore data centre near Yokohama is piloting solar-powered, battery-backed operations to enhance resilience. In Singapore, a hydrogen-ready power plant on Jurong Island paired with on-site renewables is being developed to support a low-carbon, stable energy supply.

While power remains fundamental to AI operations, water infrastructure is gaining equal prominence. Data centres, with AI workload, rely heavily on water for cooling, and governments in water-stressed regions are responding with tighter regulations. Malaysia’s Water Services Commission, for instance, has proposed that data centres explore reclaimed water and desalination before receiving operating approvals. In Johor, a leading operator, in partnership with local authorities, has launched the countries largest recycled water initiative setting a new benchmark for sustainable water use in the sector.

These efforts reflect a growing trend toward circular resource use, renewable integration, and climate resilience in digital infrastructure.

Project activity

Asia is poised to be the fastest-growing region for data centre colocation over the next five years, with accelerating demand from emerging markets driving deeper market penetration. India is a standout player, commanding a massive data centre construction pipeline valued at US$56.4bn, accounting for nearly 30% of the upcoming projects in the region by value.⁹

In the GCC, the KSA leads the data centre construction landscape with a pipeline worth US$12.1bn, followed by the UAE at US$1.8bn.⁹

Australia

Australia currently has a data centre project pipeline worth US$20bn.⁹ Sydney remains Australia's leading data centre market, driven by hyperscale demand and improved global connectivity through new subsea cables. Melbourne is emerging as a key hub, supported by faster approvals. Perth and Darwin are gaining traction due to strategic locations and connectivity, while Brisbane and Adelaide show potential, especially with future subsea developments and public sector needs. Artificial Intelligence is also becoming a core focus. In late 2024, the launch of “Australia's first AI Plan” (National AI Capability Plan) highlighted AI development and investment, accompanied by a government-led strategy aimed at promoting growth and setting standards.¹⁰

India

Mumbai continues to lead India’s data centre landscape and ranks among the top five markets in APAC. In the past year, both colocation operators and hyperscalers have scaled up their presence. At the same time, India's data centre landscape is expanding beyond major metros into Tier 2 and Tier 3 cities such as GIFT City, Ahmedabad, Pune and Bhubaneshwar, driven by rising digital demand, edge computing growth, and supportive government policies.

Japan

Data centre developers in Japan are scaling up AI infrastructure with plans to deploy 10,000 GPUs annually and invest in next-gen supercomputing. In urban areas like Tokyo, they are also rolling out smaller, decentralized facilities (2–10 MW) to improve latency and serve growing AI and computing demands. On the other hand the Development Bank of Japan (DBJ) has suggested the Tohoku area is suitable for data centre construction given its proximity to Tokyo, lower land prices and cooler climate compared with larger cities and other areas such as Hokkaido or Kyushu.¹¹

Malaysia

After India, Malaysia is witnessing the second highest construction activity by value of projects with US$46bn worth of projects currently underway.⁹ Johor’s proximity to Singapore has made it a prime location for spill over demand, a position now reinforced by the launch of the Johor-Singapore Special Economic Zone. Areas like Pulai and Sedenak are emerging as key development hubs. MIDA (Malaysian Investment Development Authority) stated that the arrival of Deepseek could boost growth in the data centre sector, as more affordable AI solutions often drive higher usage. With strong digital progress, a strategic location, and rising data traffic, Malaysia remains well-positioned to strengthen its role as a regional data hub.

Singapore

A key development supporting future growth is the Johor-Singapore Special Economic Zone, aiming to boost cross-border collaboration and attract investment through tax benefits and streamlined logistics.¹² Looking ahead, the government plans to release 300 MW of new power under its Green Data Centre Roadmap.¹³ Although the release date is yet to be confirmed, operators are already preparing bids focused on energy efficiency and sustainability. Construction has also begun on one of the first facilities approved in a previous allocation round, with the project targeting AI workloads and set to go live by early 2027.

South Korea

While Southwest Seoul leads in current capacity, most future developments are shifting to Incheon and West Gyeonggi. To meet energy demands, South Korea is exploring hydrogen fuel cells and SMRs, with one targeted for 2028. These efforts, backed by national AI and data policies, are set to drive further data centre growth.

Taiwan

Taiwan’s data centre market is gradually growing, supported by its established semiconductor industry. While local telecom companies once led the sector, international developers have recently begun setting up operations. The focus is slowly shifting from smaller colocation sites to larger facilities, including a newly planned 80 MW data centre which is one of the biggest in the country to date.

GCC

The majority of upcoming data centre projects in the KSA are located in Riyadh and Dammam. The country is ramping up its data infrastructure through major initiatives, including a US$100bn Transcendence AI Initiative and substantial investments to support the growth of its data centre landscape.¹⁴ Approximately 30% of the total project value is currently under execution, with the rest at various stages of planning.⁹

The UAE is advancing its digital capabilities with the development of a 100 MW AI-focused data centre in Abu Dhabi, alongside broader plans for future expansion.⁹

A recent initiative is the launch of Stargate UAE in coordination with the US government, marking the first global expansion of an AI infrastructure platform. The partnership involves establishing a 1 GW computer cluster in Abu Dhabi, with 200 MW set to become operational by 2026, along with the UAE investment in US Stargate infrastructure.¹⁵

Key considerations

01 Constrained contractor's capacity

Southeast Asia’s construction market is seeing a significant uptick in activity, driven by the launch of large-scale projects such as Changi Terminal 5. These developments are expected to place considerable pressure on the region’s contractor pool, drawing resources from across sectors. In response to this rising demand, the market is expanding beyond traditional players. Notably, Tier 1 contractors who have not typically operated in the data centre space are now actively seeking to enter this sector, signalling both opportunity and a shift in market dynamics. At the same time, contractor capability is becoming a key consideration for new entrants.

02 Labour shortages

Skilled labour shortages continue to be one of the key challenges for data centre construction in the region, especially in the developed countries. For instance, Japan is facing a deepening labour crisis, with the jobs-to-applicants ratio for construction workers reaching 5.60, as compared to the national average of 1.25 in December 2024.¹⁶ Amid skilled labour challenges utilising modular and off-site construction methods, particularly for MEP systems, continues to be the preferred method of delivery.

In recent years, the GCC region has experienced a steady increase in foreign labour inflows, driven by the ongoing progress of large-scale projects. In the KSA, a shortage of skilled workers is becoming more noticeable, leading to increased competition among contractors and project developers.

03 Geopolitical impacts

Geopolitical tensions are creating volatility in commodity markets. While this uncertainty persists, a short-term dip in prices for key materials is expected as Chinese exports shift towards the APAC region. However, long-lead items with complex global supply chains may continue to face pricing fluctuations, the full impact of which remains uncertain.

Demand for data centres in APAC continues to grow, supported by ongoing investments, however, with hyperscalers reassessing their global strategies, APAC could also feel the impact, potentially resulting in temporary pauses in construction activity.

This period of transition presents an opportunity for the data centre construction ecosystem to adopt more resilient design and construction practices addressing evolving needs related to supply chain, labour shortages, and power constraints.

Sources

Illustrating the Global State of 5G SA, Ookla Research™, February 24, 2025
APAC drives datacenter M&A, funding activity to 3-year high in 2024, S&P Global, January 23, 2025
Datacenter IT Power Capacity in Asia/Pacific* to Reach 94.4 Gigawatts in 2028, IDC Research, August 04, 2024
Unlocking the data centre opportunity in the Middle East, PWC, April 10, 2025
EY: Learning from Europe: Accelerating the Development of Taiwan’s Renewable Power Trading Market, March 2025
Energy Reset, Singapore Green Plan 2030
Government of India Ministry of Power, Sept 2023, 500GW Nonfossil Fuel Target
Reuters:Japan targets 40-50% power supply from renewables by 2040, December 2024
Globaldata
An Australian-first AI Plan to boost capability, Ministers for the Department of Industry, Science and Resources, Australia, December 16, 2024
Development Bank of Japan (DBJ)
Singapore and Malaysia officially launch the Johor-Singapore Special Economic Zone, Reed Smith LLP, April 08, 2025
Singapore to unlock 300MW of data center capacity through industry energy efficiency initiatives, Data Centre Dynamics Ltd (DCD), May 30, 2024
The uncertain dividends of AI in the Middle East, International Institute for Strategic Studies (IISS), May 27, 2025
Introducing Stargate UAE, OpenAI, May 22, 2025
Japan’s foreign workforce hits fresh record as labor crisis deepens, Japan Times, January 2025

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