Managing director of DCByte Ltd (APAC) claims that a large portion of the uptake for the Malaysian market is attributed to the expansion of data centres in Kuala Lumpur and Johor.
Malaysia emerged as the top location for data centre investment among the Southeast Asia Five (SEA-5) with 113MW of take-up in 2022 and a 20% supply growth forecast for the following five years.
Malaysia, Indonesia, Thailand, Philippines, Vietnam, and Thailand make up the SEA-5. At the launch event for the Malaysian Data Center White Paper report on Wednesday, panellists from Knight Frank (Malaysia) Sdn Bhd shared this (April 12).
James Murphy, managing director of DCByte Ltd (APAC), Fred Fitzalan Howard, associate director of data centre lead for Knight Frank Asia (APAC), Chelwin Soo, director of land and industrial solutions for Knight Frank (Malaysia) Sdn Bhd, and Justin Chee, executive director of valuation and advisory for Knight Frank Malaysia, were the panellists. Amy Wong, executive director of research and consultancy for Knight Frank Malaysia, moderated the discussion.
Murphy claims that a large portion of the uptake for the Malaysian market is attributed to the expansion of data centres in Kuala Lumpur and Johor.
He claims that during the pandemic, Kuala Lumpur’s data centre supply increased by 250W from 60MW in 2012 to 2019.Johor was mentioned by Murphy as well: “Johor has experienced tremendous growth in recent years.
The market for data centres in Johor didn’t experience any noteworthy developments in 2020. However, we started to notice a ton of developments in 2021 and 2022. In contrast to other markets, Johor is building data centres at a pace of about 12 to 15 months as opposed to the customary 18 to 24 months.
According to him, Johor also draws investors because of its plentiful land and power supply as well as its friendly local authorities. According to the report, among other developments are JB1 by Open DC, Iskandar Puteri Core Data Centre (Nusajaya Tech Park) by VADS, Sedenak Tech Park by Yondr, and the SEA Data Centre by YTL in the Johor region.
Murphy added that Malaysia’s position as the top SEA-5 market for data centre investment was the result of the nation’s strong GDP growth figures (8.7%) in comparison to its peers and recently-announced cloud regions for Amazon Web Services (AWS) and Google.
In the meantime, Howard claimed that, given the rapid advancement of technology, data centre infrastructure is a much-needed asset in this area.
Since they want to make institutional investments, investors are typically drawn to this sector. The second benefit of data centres is their association with financial security. Since it is very expensive to move into data centres, tenants rarely do so; therefore, it is usually best to renovate and repurpose these facilities.
Although Vietnam and the Philippines have larger populations, Howard noted that these countries’ GDP growth is lacking, which discourages hyper-scalers from entering these markets. Additionally, there is much less transparency in doing business in these markets. It is not surprising that the Malaysian data centre market may surpass other top regions given how much faster Malaysia and Indonesia are growing than these two markets.