Global Data Centers - Getting Connected with a Niche Sector
Data centers are increasingly becoming critical infrastructure to support the mass adoption of new and existing technologies.
Like the U.S. and European markets, the data center sector in Asia Pacific has been benefiting from the growth of internet traffic and data volume as the numbers of and usage by both individual and corporate users rose. In line with global trends, the cloud services industry is currently leading the next wave of data center demand in the region. In addition, the COVID-19 pandemic has accelerated consumer trends such as e-commerce penetration and led to changes in infrastructure for home working and distance learning.
With those strong demand drivers in place, occupancy rates are high, ranging from 75 to 95%. A number of markets are expected to significantly increase supply, as capital continues to flow toward development (exhibit AP1). The top four markets of Singapore, Tokyo, Sydney and Hong Kong have attracted the most development interest, and capacity is expected to double by 2022. However, occupancy rates are likely to remain high because of robust demand from hyperscale cloud service providers.
We look at the underlying demand for data centers and examine how, based on current trends, the sector is set to grow significantly in the coming years.
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Data centers are increasingly becoming critical infrastructure to support the mass adoption of new and existing technologies.
Overall data center demand growth has been solid in recent years, keeping average vacancy rates in the United States at 8 to 12% since 2014.
The data center market in Europe has benefited from global demand drivers such as structural changes, growth in cloud services, e-commerce and remote working.