The data economy in Asia-Pacific is booming, and at the heart of this transformation lies the colocation market. Instead of spending billions to build and maintain their own facilities, enterprises across industries are choosing to lease space, power, and cooling in third-party data centers. It’s a smarter, more flexible way to scale digital infrastructure—and in APAC, demand is accelerating faster than almost anywhere else in the world.
In 2024, the region’s colocation market was valued at around USD 19.32 billion. By 2030, it is expected to soar past USD 50 billion. Some forecasts paint an even more cautious picture, but whether you look at the most optimistic or the most conservative estimates, the conclusion is the same: APAC is on track to overtake the United States as the world’s largest colocation market.
What’s Driving the Boom?
One of the biggest accelerators is artificial intelligence. Training and deploying large AI models consumes staggering amounts of computing power, and data centers are racing to keep up. Analysts predict that power demand will increase by more than 160 percent by 2030 compared to today, much of it tied to AI workloads.
Cloud adoption is another powerful engine. Hyperscale players like AWS, Microsoft, Google, and Alibaba are investing billions into the region, and with the software-as-a-service market alone expected to grow at over 20 percent annually from 2025 onward, colocation provides the scalable foundation they need.
Add to this the rise of 5G, smart cities, and the Internet of Things, and the picture becomes even clearer. By the end of the decade, smartphone penetration in Asia-Pacific will approach 94 percent, fiber connectivity is already near-universal in advanced markets, and applications like autonomous vehicles and real-time analytics will demand lower latency. That’s where edge computing comes in, bringing micro data centers closer to where data is generated.
Southeast Asia’s Rising Role
While giants like China, Japan, and South Korea continue to dominate the regional market, Southeast Asia is quietly becoming one of the most dynamic sub-regions. Today, it accounts for just over 20 percent of APAC’s colocation investments. By 2030, that share is expected to rise to 24 percent, worth more than USD 12 billion.
Singapore has long been the region’s digital capital, but power and land constraints are forcing operators to diversify. Malaysia is quickly emerging as a challenger, forecast to become one of the top five colocation markets in APAC by 2029. Indonesia and the Philippines are attracting global players with bold new investments, while Thailand is supporting development through government-backed multi-data-center parks.
The appeal is obvious: Southeast Asia offers a sweet spot of cost-effectiveness, connectivity, and policy support. But it’s not without risks. Natural disasters, grid instability, and environmental concerns mean that resilience and sustainability will be just as important as scale.
Who’s Leading the Charge?
Global and regional operators are expanding aggressively. Equinix is building its footprint in markets like the Philippines, while Digital Realty, STT Global Data Centres, NEXTDC, and Chindata Group are pushing ahead with new builds and acquisitions. Sustainability is increasingly part of the equation, too. Operators are experimenting with renewable energy, more efficient cooling systems, and even alternative fuels such as hydrotreated vegetable oil for backup generators.
Industry demand is diverse. Financial services remain the top colocation users thanks to strict security needs, followed closely by technology and telecom companies. Healthcare and government are climbing the ranks as digital health programs and e-governance initiatives expand. Retail colocation remains popular for its flexibility, while wholesale models cater to hyperscale requirements.
The Challenges Ahead
Despite the optimism, there are hurdles to overcome. Power availability is perhaps the most pressing. In dense hubs like Tokyo and Seoul, grid constraints have doubled data center costs in recent years. Environmental concerns are intensifying as well. Colocation will account for the vast majority of APAC’s data center capacity by 2030, and with that comes scrutiny over carbon footprints and sustainability practices.
Regulation adds another layer of complexity. While established hubs like Singapore and Hong Kong have strong data protection frameworks, emerging markets are still developing their policies. Geopolitical factors—from trade tensions to investment restrictions—could also reshape the growth path.
Looking Ahead
What’s clear is that colocation is no longer just a support system for Asia-Pacific’s digital economy—it’s becoming the foundation. By 2030, it is expected to make up 86 percent of the region’s operational capacity, firmly establishing APAC as the world’s data center powerhouse.
For Southeast Asia, the opportunity is even more striking. With its share of the market growing steadily, the sub-region is evolving into a bridge between mature hubs and emerging digital economies. Investors and operators who embrace sustainable practices, expand into new cities, and build resilient infrastructure will be best placed to capture the upside.
As artificial intelligence, 5G, and edge computing reshape how data is created and consumed, colocation will remain at the center of it all—powering the next era of digital innovation and positioning APAC as the leader of the global data frontier.
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