Asia Pacific Data Centre Investment Landscape

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ASIA PACIFIC DATA CENTRE INVESTMENT LANDSCAPE

Yield on Cost The five most expensive markets for data centre development in the Asia Pacific region are the advanced economies of Japan, Singapore, Australia, South Korea, and Hong Kong China. These markets collectively report an average development cost* of approximately US$12.9 million per MW. In comparison, the U.S. records a lower average development cost of US$12.2 million per MW, representing about 6% discount over the advanced Asia markets. Across the broader Asia Pacific region, the average development cost as at 2024 stands at US$10.1 million per MW (about 17% lower than the US). This APAC development cost reflects a year-on-year increase of 3.8%, driven not only by inflationary pressures but also by escalating requirements for higher power density, which is significantly impacting construction specifications and costs. When examining Yield on Cost (YoC) across Asia Pacific markets—excluding Singapore and Vietnam—the range falls between 10% and 16%. Singapore is a notable outlier, delivering a YoC of 21% to 23%, supported by high rents, sustained demand, low vacancy, and an absence of new supply over the past five years. Vietnam, while still in the early stages of data centre development, presents a YoC ranging from 17.5% to 18.8%. This is attributed to a combination of high rental rates and comparatively lower development costs. Seven of the 14 markets in Asia Pacific are estimated to have a YoC of over 12%. These markets include Australia, Indonesia, New Zealand, Philippines, Singapore, South Korea, and Vietnam. Forecasts suggest that all markets except Japan will have lower or unchanged policy rates in 2030 compared to those at the end of 2024. Japan has returned to a positive range after keeping negative interest rates for over 10 years and forecast a slight uptick ahead.

Yield on Cost and per MW Development Cost Including Land Cost/MW US$million YoC - Low YoC - High

YoC %

US$ million

25%

20

23%

18

21%

16

19%

14

17%

12

15%

10

13%

8

11%

6

9%

4

7%

2

5%

0

Singapore Vietnam New Zealand Philippines South Korea Indonesia Australia Malaysia Chinese Mainland

Thailand Taiwan, China India Hong Kong, China

Japan ASIA PACIFIC USA

Source: Cushman & Wakefield APAC DCG

The YoC at an overall level in Asia Pacific is similar to the U.S., ranging between 11% and 12%

• The average year on year inflation rate (Consumer Price Index – CPI) across Asia Pacific is forecast at 3.1% between 2025 and 2030. • Except India (4.4%) all markets are forecast to have an average inflation rate of under 3% between 2025 and 2030.

Notes for graph - • For the purpose of comparison, net property income (NPI) of 70% has been used for all markets. • Colocation rental income is the only source of revenue factored in the assessments. Other charges such as cross connects, internet, one-time set-up fees, add-on services, etc. have been excluded from the analysis. • The estimates are based on unlevered cost of capital.

*Development cost is inclusive of construction and land costs

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