India a key market in Asia Pacific for expansion of Data Centres
Driven by factors like telecom companies shedding data centres and focusing on their core competence, cyber security, growth of content providers, outsourcing by startups, and regulators focus on keeping data within India, the market for data centres has been growing in India.
- Growing Population, Govt’s Digital Initiatives to Boost Demand
- Revenue for shared or colocation data centres from Asia Pacific region expected to overtake U.S
Investments in data centres will continue to grow in Asia Pacific with investor interest rising in the emerging markets of India, China, and Indonesia.
India’s massive population base coupled with various government-led digital initiatives are likely to boost growth in the public cloud services market. The second largest country by mobile internet users, India’s internet economy is projected to double by 2020.
Driven by factors like telecom companies shedding data centres and focusing on their core competence, cyber security, growth of content providers, outsourcing by startups, and regulators focus on keeping data within India, the market for data centres has been growing in India. These along with the Government’s Digital India campaign is expected to push greater demand for quality data centres. With demand for data storage rising, many companies are looking to rent a share of facilities rather than own a centre.
According to our research, revenue for shared or colocation data centres from APAC region is expected to overtake the US, rising to 40 per cent of global share by 2020.
Buoyed by the region’s rapid urbanization and adoption of e-commerce, APAC is experiencing a surge in data generated from various digital products and services. To cope with the amount of information, businesses are shifting towards storing their data on cloud services. Leading cloud providers such as Google, Amazon, Microsoft and Alibaba are competing to add cloud zones across the region as APAC’s spend on public cloud services is expected to touch US$15 billion in 2018.
With the fastest growing data centre market in the world, China’s need for colocation space continues to be anchored by the country’s rapid fintech growth, digital transformation and reliance on big data analytics. In fact, tier-two cities in China are also predicted to draw interest due to the availability of land and power, lower operating costs, and improving network and support infrastructure.
However, data centres are a unique asset class and market entry remains a challenge due to the lack of specialised expertise and knowledge in this sector. Other ways to gain exposure are build-to-suit data centres or sale-and-leaseback of existing facilities. In the first scenario, investors engage with the operator at the initial stages and develop a new build based on their specifications. In the second, investors acquire existing data centres directly from the operator or end-user, but accord full operational control to them.
Looking ahead, data centres will continue to feature strongly on investors’ agendas as prospects in APAC continue to expand with significant capital targeting the emerging markets. Given their large market size and potential, markets in this region offer strong user demand and solid growth opportunities.
For more information, please download “Data Centres: Powering Asia’s Digital Boom” here.