(Singapore) — The demand for data storage capacity in Asia has surged sharply over the past five years, fueled by rapid internet adoption, cloud migration, the expansion of streaming services, and corporate digital transformation—trends now amplified by the rapid adoption of artificial intelligence (AI), which requires massive I/O and exabyte-scale storage. Industry projections suggest that AI workloads alone could push enterprise SSD and storage demand from tens of exabytes today to hundreds of exabytes in the next few years.
This dynamic has turned Asia’s data centers from mere server warehouses into strategic infrastructure: hubs of storage and computing that must support AI model training, inference, and hyperscale cloud services. What used to be colocation business has now evolved to include AI-optimized designs and managed data services.
At the macro level, the Asia-Pacific data center market is expanding fast. Reports estimate that the AI-optimized data center segment in the region is worth several billion dollars in the mid-2020s and is projected to grow at a compound annual growth rate (CAGR) of over 30% through 2030, driven by hyperscaler investments, telecoms, and local conglomerates.
India stands out as the most aggressive growth market. Its data center market was valued at several billion dollars in 2023 and is projected to multiply toward 2030, with double-digit CAGR. Growth is driven by cloud adoption, local data residency rules, and enterprise migration to in-country infrastructure. India’s storage capacity and colocation demand are rising in tandem with digital government and corporate initiatives.
China remains the giant in physical capacity and storage, spearheaded by its “East-Data-West-Compute” initiative that channels new data center builds to the energy-cheaper western provinces. The Chinese storage market continues steady growth, supported by national data sovereignty policies that enforce local build-outs at scale.
Japan represents a high-value, premium market. The country demands low-latency, compliant, and high-quality services, keeping it strategic for top-tier data centers despite stagnant demographics. Enterprise storage requirements in Japan are expanding, particularly in cloud and industrial workloads.
Singapore continues to serve as the regional hub for hyperscalers and interconnection. Its gross power capacity has reached hundreds of megawatts, with operators expanding portfolios to serve Asia-Pacific demand. Despite energy and land-use policy constraints, colocation demand remains strong, cementing Singapore as a transit and digital services hub.
Indonesia shows explosive demand but still suffers from a large infrastructure gap. The country’s data center capacity was estimated at nearly 1.0 GW in the mid-2020s and is projected to more than double by 2030, supported by hyperscale and colocation projects. Colocation market revenues are forecast to grow at double-digit CAGR, though energy supply and land availability remain pressing constraints.
Vietnam and the Philippines are emerging as fast-growth markets. Vietnam is strengthening local storage and hosting capacity to reduce reliance on imported cloud services, while the Philippines is recording rapid growth in MW capacity and colocation revenues from a low base, driven by digital banking and e-commerce. Both markets face regulatory and infrastructure challenges.
Raw storage demand is also exploding. Industry research projects SSD demand for AI training and inference to soar—from single-digit exabytes to dozens and eventually hundreds of exabytes by decade’s end—driving heavy spending on tier-1 storage and NVMe-based architectures.
On the supply side, regional operators such as Keppel and GDS, as well as global hyperscalers, are accelerating expansion. Keppel, for example, is targeting major increases in funds under management and power capacity in response to AI-driven demand. Chinese operators are also building aggressively in lower-cost western regions.
Asia’s data center industry is no longer just about racks and megawatts. Energy costs and sustainability have become central issues. Regulators and investors increasingly demand renewable energy and more efficient cooling technologies, pushing operators to innovate or risk losing licenses.
Business models are evolving. Beyond traditional colocation, operators now provide managed services, hybrid cloud orchestration, and edge facilities for latency-sensitive workloads. Edge data centers are growing in Asia’s major cities to support 5G, IoT, and real-time analytics.
From an investment perspective, some markets—such as Indonesia and the Philippines—offer faster ROI due to acute supply shortages, while Singapore and Japan provide stability and premium pricing. Geopolitical risk and data localization policies also shape hyperscaler decisions.
Regulatory environments matter. Local data residency laws and national security requirements are accelerating in-country builds but add cost and compliance complexity for foreign operators. Markets that balance protection with investment incentives attract more capital.
Cooling technology and efficiency are becoming key differentiators. Operators deploying free-cooling, immersion cooling, or modular builds can lower PUE and reduce costs, offering more competitive pricing to hyperscalers and enterprises.
Private equity is increasingly entering Asia’s data center market. With record dry powder and limited returns in traditional sectors, funds are targeting data center operators as high-growth, yield-generating assets. Buyouts, joint ventures, and growth capital injections are accelerating across emerging markets, from Jakarta to Manila.
Several high-profile transactions underscore this trend. Major global PE firms such as KKR, Blackstone, and EQT have recently invested in or partnered with data center companies in Asia, citing structural demand growth driven by AI, cloud, and data localization. Analysts expect PE involvement to deepen through 2030 as investors chase long-term infrastructure returns.
Market projections suggest double-digit growth across Asia’s leading data center markets through 2030. India, Indonesia, and the Philippines are expected to post the highest CAGR in colocation revenues, while the region’s AI-optimized data center segment may expand at more than 30% annually. The endgame is a market that is bigger, more specialized, and far more capital-intensive.
