Knight Frank: Malaysia Most Attractive Destination For Data Centre Investment

Malaysia is the most attractive destination for data centre investment among emerging markets in Southeast Asia, said independent real estate consultancy Knight Frank Malaysia.

The company launched its white paper on data centres in Malaysia in partnership with DC Byte, highlighting the country's attractiveness for data centre investment in Kuala Lumpur and Johor.

Knight Frank Asia Pacific Data Centre lead associate director Fred Fitzalan Howard said Malaysia is leading in the Knight Frank SEA-5 Data Centre Opportunity Index, which examines the key markets within Malaysia, Indonesia, Vietnam, the Philippines and Thailand to understand each respective country's current data centre ranking against its peers.

“The white paper will shed some light about what is happening across two key markets for data centre investment in Malaysia, the first in Kuala Lumpur that is seeing a huge cloud appetite with the western hyperscale providers announcing the launch of their cloud region in the past 12 months.

“Secondly, we wanted to touch upon the growth opportunity in Johor, not only the spillover from Singapore, but also as the upcoming regional hub for data centres for western and Chinese hyperscale service providers,” he said after the launch here.

Fitzalan Howard noted that Malaysia's strong gross domestic product (GDP) growth figures at 8.7 %, alongside newly-announced cloud regions for Amazon Web Services (AWS) and Google, resulted in its leading position in the SEA-5 market.

He said the country's growth against other tier-2 markets in Asia is proof that Malaysia, alongside Indonesia, is surging ahead as the largest provider of space and supply for data centre investment.

“In contrast, other rival nations are grappling with land ownership laws and telecoms deregulation, hindering their growth potential.

“Over the last decade, a surge in cloud interest, government-backed initiatives and the Singapore data centre moratorium has contributed to Malaysia to become one of the most dynamic data centre markets in the Asia Pacific region,” he added.

According to the white paper, Malaysia registered a 113 megawatt (MW) of take-up for data centres in 2022, a four-fold increase over the next highest market of Thailand, which saw a respectable 25 MW of take-up, and represents domination over the rest of the market.

“Much of this take-up accounts for the growth in Johor, although Kuala Lumpur, which has also reported double digit take-up figures for the past three years, has also contributed to this,” it said.