Global Data Centre Market Hit Us4 Tril 2030 Apac Sees Bulk 2024 Investments Knight Frank
In the coming years, the global data centre market is expected to experience rapid growth after a strong recovery in 2024. According to the latest Global Data Centres Report by Knight Frank, the volume of real estate transactions in data centres worldwide increased by 118% year-on-year to reach US$31.8 billion ($42.9 billion) last year, following a decline driven by interest rate hikes in 2023.
On average, the global transaction values for data centre deals in 2024 were US$75.4 million, which is a 15% increase year-on-year and 44% higher than the pre-Covid levels seen in 2019. The report also highlights that the Asia Pacific (Apac) region dominated data centre investments, with 70% (US$15.5 billion) of cross-border deals taking place in the region.
The positive trend in the global data centre market is expected to continue over the next five years. Knight Frank projects an annual compound annual growth rate (CAGR) of 18%, leading to a market value of US$4 trillion by 2030.
This optimistic outlook can be attributed to the growing demand for AI-optimised infrastructure, cloud services, and enterprise digital initiatives. The report predicts a 46% increase in global data centre capacity, equivalent to 20,828 megawatts (MW), over the next two years. By 2030, this capacity is expected to expand by 177%.
In Apac, Knight Frank forecasts the addition of 4,174 MW of capacity by 2027, supported by planned investments of US$58.7 billion. The key contributor will be Tokyo, with projected investments of US$4.1 billion in the next two years, leading to a capacity growth of 25% (295 MW).
Another region poised for rapid growth is Johor, in southern Malaysia. The report estimates an 85% increase (335 MW) in capacity by 2027, driven by US$4.7 billion in investments.
Despite regulatory and land constraints, Singapore remains a significant player in the data centre market. However, due to the low vacancy rates of less than 1%, the city-state has seen a shift towards smaller deals and an increase in pricing.
Fred Fitzalan-Howard, Apac Head of Data Centres at Knight Frank, predicts that the region will add about 8 gigawatts of new capacity over the next three years, with a quarter of it being dedicated to AI workloads. Although this number is lower than the global average due to Apac’s Tier 2 or Tier 3 status under US AI diffusion rules, it still represents a significant investment of US$24 billion and 20 to 30 million sq ft of real estate.
Fitzalan-Howard believes that these initial investments will lay the foundation for more AI infrastructure rollouts in the region. However, he also stresses the importance of addressing varying regulatory frameworks and adapting to US export controls on AI chips to fully capitalize on the opportunities in this rapidly evolving sector.
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In other news, Keppel recently signed a memorandum of understanding with Mitsui Fudosan to develop data centres in Japan and Southeast Asia, while SC Capital Partners and an Abu Dhabi Investment Authority subsidiary have formed a data centre investment program. Additionally, Keppel has agreed to divest its Genting Lane data centres to KDC REIT for $1.38 billion.