Asia Pacific Data Construction Cost Guide 2025

Gordon Marsden Head of Capital Markets, Asia Pacific

Annual Colocation Rental Opportunity APAC

ESTIMATED COST OF DEVELOPMENT PIPELINE PER MARKET (USD BILLIONS)

together a number of varied positions. Although some of these plays will not be successful, we will in time arrive at a consolidated number of regional and/or global players holding strong client relationships through either operating businesses or through prime leases. Transaction activity has begun At the asset level (as distinct from the entity / operator level), we have begun to see an uptick in transaction activity in Japan, Korea and Singapore. Mostly, these are legacy data centres that are more than likely to have leaned into enterprise tenants and colocation operators (rather than hyperscale), and which are not necessarily representative of today’s power demands and specifications. These transactions have nonetheless provided some clarity around pricing and as a result, we have seen a flurry of valuation activity reflecting notable entity-level transactions as well as these one-off trades. Navigating the risk / return A long-term lease might see embedded growth ahead of inflation, but it certainly won’t enjoy the often-quoted 20%+ CAGR growth seen in the broader digital economy. Investments sitting higher up the risk curve might take the form of operator exposure (OpCo or OpCo-PropCo), a shell & core developer leaning into the provision of a powered shell with some level of involvement in mechanical, electrical and plumbing (MEP) systems, or a speculative site acquisition with the potential to secure the necessary power, water and fibre to satisfy the sale requirements for data centre construction in future. The variety of opinions on how to capture the sector’s growth is substantial.

CUSHMAN & WAKEFIELD | ASIA PACIFIC - DATA CENTRE CONSTRUCTION COST GUIDE 2025 Exposure and consolidation From an investment perspective, two things are clear today (and they are not mutually exclusive). Firstly, there is a vast array of participants with ready capital seeking exposure to development. Secondly, there is an attitude of needing to make an investment to be at the table. These investments are rapidly evolving from smaller plays on, for example, a piece of land or a nascent operator, to larger scale deployments requiring consortiums that bring At the end of Q2 2024, there was over 13.5 GW of colocation capacity either under construction or in the planning stages in Asia Pacific, with about 32% of this upcoming stock located within five cities: Sydney, Tokyo, Singapore, Hong Kong and Mumbai. This is in addition to the hundreds of acres land banked by operators for future builds. By Cushman & Wakefield estimates, this development pipeline (excluding land banking) equates to a capital requirement of over $125 billion and provides an opportunity to generate over $14 billion in annual colocation rent. These new builds can potentially achieve 13% to 16% yield-on-cost ratios for developers—figures that have well and truly captured the attention of investors who are closely monitoring how the sector will be funded and held in the long term. “By Cushman & Wakefield estimates, this development pipeline equates to a capital requirement of over $125 billion and provides an opportunity to generate over $14 billion in annual colocation rent.”

0.0

10.0

20.0

30.0

40.0

Japan Malaysia India Australia China, Mainland South Korea Hong Kong SAR Indonesia Thailand Singapore New Zealand Philippines China, Taiwan Vietnam

34.1

17.4

Top 5 cities

17.1

15.2 15.0

8.2

5.1 5.1

Estimated Gross Yield on Cost APAC

2.7

2.3

1.1 1.1

0.4 0.3

Top 5 cities

Notes: • The above estimates are high-level calculations based on 2024 construction rates. The actual costs vary across markets and escalate y-o-y based on inflation and other economic parameters. The calculations and assumptions used in this analysis are only for theoretical comparison. • The average construction cost is based on the mid-range specification for the Multi-Level Hyperscaler Data Centre Development (10 Acres Approx. + 50 MW Operational Load) for respective markets. • The average colocation rent is factored at $120/kW/month for Sydney, Tokyo, Mumbai, Hong Kong and Singapore; other locations at $100/kW/month.

8