Data centres in Thailand represent a hot sector to watch as more regional operators are eyeing the colocation market in Greater Bangkok, Chon Buri and Rayong, an area previously dominated by Thai operators, according to CBRE, the international property consultant.
The rapid surge in data demand, fuelled by continued growth in cloud computing and social media use, is driving increased investor interest in Asia Pacific data centres, with investment in the sector soaring to record levels in 2021, according to CBRE research.
"In recent years, CBRE Thailand has seen the entry of regional operators such as STT and Supernap with facilities that are able to capture and support larger hyperscale requirements," said Adam Bell, head of industrial and logistics at CBRE Thailand. "This is in line with the recent increase in investment in digital infrastructure, telecoms and submarine cables, which will provide additional growth momentum to the industry."
Direct investment in the Asia Pacific data centre sector totalled US$4.8 billion in 2021 -- more than double the previous high of $2.2 billion in 2020 and surpassing investment volumes for the past four years combined, CBRE research found.
Transaction volume and fundraising activity is expected to remain robust in 2022, with data centres ranking as the most popular alternative investment for the third consecutive year in CBRE's recent survey of real estate investor intentions.
Interest in the sector has been underpinned by demand from hyperscale cloud providers for bigger facilities and multiple-site deployments. There were several large portfolio deals in Asia Pacific in the second half of 2021, including Vantage Data Centers' purchase of the PCCW data centre portfolio in Kuala Lumpur and Hong Kong, and the acquisition of five data centres in Japan by Digital Edge and Stonepeak Infrastructure.
"There is a considerable amount of capital looking to gain exposure to data centres as investors' understanding of the sector matures." said Tom Fillmore, director of Asia Pacific data centre capital markets for CBRE.
"We have already seen strong growth in recent years and the pandemic-driven digitisation trend has really supercharged interest in the sector. While opportunities will be limited relative to the demand that we are seeing, investors are pursuing the operational route by setting up dedicated platforms to secure higher returns."
Vacancies were stable at 14% for the Tier 1 markets of Greater Tokyo, Singapore, Sydney and Hong Kong, despite record data centre capacity supply of 305 megawatts in the second half of 2021. Almost 2,100MW of supply is slated to be completed by 2024, with Sydney constituting 40% of the pipeline. The new additions place Sydney on track to become the region's largest colocation market by 2024 in terms of data centre capacity. Among the findings of the report:
- Greater Tokyo is expected to see balanced demand-supply despite the completion of 200MW of new supply in the second half of 2021. Operators seeking geographical diversification outside Greater Tokyo are eyeing Osaka and other regional cities, causing rents to hold steady.
- Data centre rents in Singapore are expected to rise despite the lifting of the moratorium on new data centre construction from the second quarter of 2022 that would ease medium-term availability. The 60MW per year cap on total capacity for new applications means that Singapore's supply pipeline will lag other Tier 1 markets in the region.
- Sydney is set to have the largest development pipeline among Tier 1 markets with newly announced megaprojects. Hyperscale and wholesale rents are expected to come under pressure as new capacity, completed in phases, adds to growing vacancies.
- Hong Kong rents and vacancies are expected to hold firm as corporate end-users and hyperscale cloud providers remain on the sidelines while near-term supply remains limited.
"Thailand is expected to see continued interest from regional and global operators in the coming years. This is a developing sector in Thailand and both occupiers and landlords are adjusting their expectations in terms of bringing data centre projects to completion," said Mr Bell.
"CBRE Thailand is already seeing considerable investor interest in the sector from both local and regional funds in acquiring or being investors in data centres from an early stage of development."