As 2017 heads swiftly into the second quarter, the trends for the business of Data Centers in Asia Pacific points strongly towards very healthy growth – with a rate of tens of millions of new devices getting connected to the Internet each month, coupled with slowly, but surely, growing economies, Data Center operators face increasing opportunities – and challenges – if they want to stay at the lead of the pack.
This enormous growth rate (higher than the entire population of Canada, per quarter) comes in the form of higher demand not only for traditional Data Centers, but also for those that are capable of handling the denser requirements expected of the many cloud applications that are gaining in popularity. According to JLL’s published research, the compound annual growth rate for multi-tenant data center service market now stands at 16.3% for Asia Pacific vs 12.1% Globally.
In keeping up with this demand, even governments have joined in the fray, with Malaysia’s Multimedia Development Corporation (MDeC) initiating the building of a high-speed backbone for a more appealing environment for Data Center operations, to Indonesia’s ramping up of its nation-wide electrical infrastructure in particular address to Operators’ concerns about energy-reliability.
The private sector as well is reaping the benefits of paying attention to the strong growth in the Data Center business, as Data Center REITs have been regularly outperforming other REITs, yielding between 10-20% or more per annum, whilst the usual expected returns for the MSCI US REIT Index are near the middle single digits.
Additionally, due to the maturing of data sovereignty laws and industry regulations in APAC, more and more assets are exposed to the risk of hosting on regional “out of country” clouds. Corporations, Investors, and Clients have begun to expect immediate solutions and technical recommendations regarding the best way to integrate their commercially and innovation focused cloud strategies with the flexibility of in-country Data Services which address the Legal, Compliance, and Security requirements. This is very similar to what played out for Singapore’s TVRA’s requirements for the financial industry.
For example, in Indonesia, the implementation of Government Regulation 82 of 2012 (PP82/2012), prohibits financial data from being kept outside of the country without prior approval., At the rate of new Internet connectivity the nation is experiencing, the exposure to risk, due to the amount of data that is growing, is significantly multiplied. This has led to a significant demand for newer, more capable, secure Data Centers which are security and cloud enabled to enable a best of breed approach which addresses both commercial and compliance requirements.
About the Author
I am an Internet, Security, and Data Center Industry veteran and executive who has worked for several Internet startups to the Fortune 150 in many different capacities from technical to business level roles.
Unless otherwise noted, opinions expressed are solely my own and do not express the views or opinions of my employer.