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Urgent hyperscale demand for data centres makes leasing an attractive option

For faster go-to-market, hyperscalers must consider partnerships with data centre providers for the long run.

Hyperscale cloud revenue across the greater Asia-Pacific (Apac) region is expected to scale past US$221 billion by 2027, representing a third of global revenue in the sector and an increase of 352% from the current total.

As large companies and government agencies alike enjoy the versatility and scalability that major cloud services offer, adjoining organisations will accelerate their migrations to similar environments, leading to further adoption and increased capacity needs for each platform.

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With several large economies such as the Philippines or Indonesia, at just 70% Internet penetration regionally, hundreds of millions have yet to take full advantage of the online economy, leading to further need for service providers.

How will the largest cloud services scale accordingly? The answer lies in being able to deploy faster than before and implementing quicker infrastructure rollouts in target markets. Although the initial plan for many hyperscalers is to develop their own data centre campuses, a mix of development and wholesale leases with professional operators will lead to smoother and better planned launches to ensure client success.

Meeting rising demand

To cater to the burgeoning growth of data-enabled industries, hyperscale giants are looking to build their own in-market data centres that will enable low-latency usage of each of their platforms. Self-build has already been on the rise, with nearly 500 MW currently under construction and another 500 MW in serious planning within Apac alone.

New-market entrants must ensure speed-to-market, but this may be impeded by their lack of expertise in sourcing for viable land and executing the end-to-end process for building a scalable data centre within a timeline promised to stakeholders. Combined with recent issues in global supply chains, this translates to longer timeframes in sourcing for the necessary parts to piece a data centre together.

Shifting our focus to emerging markets, power infrastructure has been a concern recently as countries struggle to meet power demands needed to facilitate the growth of industries requiring substantial amounts of power.

Particularly, Vietnam has concerns regarding its developing power grid, with outages reported throughout the northern half of the country earlier this year. As power needs are projected to grow by 10% a year through 2030, the country has amended regulations to allow private investors to fill the shortfall, expected to total 65 gigawatts.

With similar trends of power shortages emerging across the region, even major cities such as Seoul and Jakarta may soon encounter grid issues due to the sudden and consistent demand for large developments.

Meanwhile, there is an added layer of regulatory hurdles with businesses building data centres increasingly expected to play an active role in helping meet a country’s climate goals. Given the fragmentation of the regional data centre regulatory landscape, it can be challenging for businesses to be able to piece together the puzzle of permits, infrastructural needs and technologies needed to kickstart the building of data centres.

After a multi-year moratorium, Singapore is allowing applications for data centre development, providing that specific sizing and power usage effectiveness goals are achieved by prospective operators. While other markets regionally are encouraging the booming demand for data centres, the issues associated with sudden and consistent demand for large developments are likely to lead to more regulatory requirements.

Third-party data centre providers

This is where a third-party provider steps in with the expertise and planning to address the concerns of hyperscalers, allowing them to focus on what matters the most—their clients.

From a leasing perspective, data centre providers enable speed-to-market with adaptable in-market solutions, giving businesses the capacity to onboard new clients and be flexible in meeting requirements if a new project with a short timeline emerges.

Further, ‘build-to-suit’ data centres that are developed to a customer’s own specifications but with the experience and expertise offered by a global data centre provider. This, along with dedicated support and substantial funding, can quicken the land acquisition process for potential development, enabling hyperscalers to hit the ground running in a new market.

Ease of entry, cost effectiveness, and smoother launch all lead to a continued partnership between the largest cloud services and globally effective operators.

The data centre industry acts as an infrastructure backbone, enabling governments worldwide to drive growth, generate employment, and boost the digital economy. In Singapore alone, the data centre industry adds over $2 billion to the economy annually and 1.6 million jobs are enabled by cloud computing services provided by local data centres, according to AlphaBeta’s 2022 analysis. For faster go-to-market when time is of the essence and scale, especially in new markets, hyperscalers and other data centre users must consider partnerships with data centre providers for the long run.

Kelvin Fong is the managing director for Apac at EdgeConnex 

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