Data Centres, once a niche investment and inflexible asset for global enterprises, are now a cornerstone of the information economy. Over the past decade $100 billion has poured into the asset class, according to our Data Centre Market Comparison, a ranking of the global Data Centre markets.
The rapidly shifting data centre landscape
This significant capital inflow has been matched by an equally major technical shift, as enterprises have chosen to move workloads off premises, first to colocation facilities and more recently to a mixture of colocation and public and private clouds. This shift has caused the largest cloud platform providers – Amazon, Google and Microsoft – to become the most influential players in many markets, altering data centre sizing by a factor of 10. The 10-megawatt (MW) data centre that was impressive 10 years ago now pales in comparison to 30-MW leases now signed with increasing regularity.
Cushman & Wakefield’s study evaluated 1,162 data centres across 38 global markets, with each data centre scored across 12 weighted criteria, including:
- Cloud availability
- Fibre connectivity
- Market size
- Development pipeline
- Government incentives
- Market vacancy
- Political stability
- Environmental risk
- Land prices
- Power costs
The speed with which the industry is shifting makes the creation of a data centre strategy a complex and daunting task.
Dave Fanning, Executive Managing Director and Leader of Cushman & Wakefield’s Data Centre Advisory Group advises that enterprises must determine what to do with their on-premises facility, which workloads to move to the cloud and how to implement a hybrid IT strategy. Developers and operators require a parcel with robust fibre and access to power as well as a thorough grasp of the permitting process and all risk factors. Investors must be able to assess the long-term potential of a data centre to hold its value and how easily it can be upgraded. All involved require access to capital and a clear understanding of objectives.
Singapore ranks in at world number six
Singapore was ranked number six in the global rankings, the only Asian country to be named after the American markets of Northern Virginia, Silicon Valley, Dallas, Chicago and New York/New Jersey.
Singapore’s undersea cables and strong business climate have enabled developers to build data centres in the last few years, although the future of its development pipeline hangs in the balance as the city state pushes forwards with plans for a 36 per cent target reduction in carbon emissions by 2030.
Future government allocation of more land to develop data centres will need to factor the pressure on its carbon footprint. Additional data centres mean additional power consumption, resulting in an increased carbon footprint. Singapore may not be the largest in terms of footprint but it is one of the highest consumers of power per capita.
The pipeline the market witnessed in 2019 will fall short in 2020 into 2021. Although the authorities have not formally put an embargo on land allocation for data centres, we cannot dismiss climate change considerations. The number of investors looking to neighbouring Malaysia, Indonesia, and Thailand to invest in data centre developments has picked up pace. Apart from the few who have invested outside of Asia (Keppel DC REIT recently bought a second data centre in Frankfurt in January 2020), most investors will be looking to Asia for green field sites and source for brownfield sites in the Americas and EMEA.
Singapore will continue to score well in cloud availability and fibre connectivity. Faster, denser fibre generally allows for the lowest latency and better network reliability when functioning with major cloud services. Singapore’s robust fibre network will enhance its position as a regional hub supporting the storage of data that is generated in mega cities nearby including Jakarta.
To find out more about global data centre trends and investment opportunities, check out our Data Centre Market Comparison report.