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Vietnam – top fastest growing data center in the world

During a boom in data demand worldwide, data centers in Asian markets continue to grow strongly, driven by growing demand from digital economies. In Indonesia, Malaysia and India, the Government is also actively promoting investment in digital infrastructure, aiming to attract global data center investors.

Asian markets accelerate investment in data center development

Asian countries are seeing increased demand for data centers to serve their domestic digital economies and developed markets.
Mr. Thomas Rooney, Senior Manager, Industrial Consulting Services, Savills Hanoi, said: “Developing Asian countries will see increasing demand for data centers, as the economy digital and online shopping habits increase. India, Indonesia and Malaysia are countries that have invested heavily in their digital infrastructure.”

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More than 200 million of Indonesia’s 275 million population have Internet access, and the country’s online retail market is expected to grow to $95 billion by 2025. The country is also at the center of technology development, with several domestic unicorns including GoTo, which raised more than $1 billion when it listed last year. The attraction of data centers in Indonesia lies not only in the country but also in neighboring islands to be able to serve both domestic and foreign needs. One of them is Batam, an Indonesian island near Singapore, which is expected to become a data center hotspot in the future, serving both demand from Indonesia and Singapore. This island is developed and utilizes conventional and renewable energy, thereby becoming attractive to data miners.
Malaysia has also invested in digital infrastructure, through the deployment of undersea fiber optic cables, enhancing domestic connectivity and developing 5G. This has attracted interest from foreign companies, such as Australian data center investor NEXTDC, which is building a 65MW data center, which will be Malaysia’s largest Tier IV facility .
Meanwhile, India’s huge population and growing wealth mean the country will become the epicenter of data centers in the region. According to Savills Impacts report, the total capacity of India’s data centers added in 2022 is 150 MW and in 2023 is 250 MW, bringing the total capacity of current data centers in India to reach 1 GW. Government-led initiatives such as Digital India, or the emphasis on self-reliance and data protection through data localization, are expected to increase the volume of data in the country, leading to increased demand for data centers.

Vietnam’s data center industry is one of the fastest growing markets in the world

Savills Asia Pacific report shows that Indonesia, Malaysia, Thailand and Vietnam have fewer data centers than Hong Kong and Singapore, despite having a population 30 times larger. However, Vietnam’s data centers are considered one of the fastest growing markets in the world thanks to the digitalization process of domestic small and medium enterprises and a young, digitally savvy population. the emergence of 5G, the need for self-provisioning of digital infrastructure and data localization laws.
In Vietnam, according to Savills Vietnam, there are a total of 28 data center projects with a total capacity of 45 MW. The market recorded the participation of 44 service providers.
Since Q1 2021, inquiries from foreign data center operators looking for locations and potential joint venture partners in Vietnam have increased as hyperscalers announced their interest. interested in Vietnam. Notably, in August 2022, Amazon Web Services (AWS) announced the launch of data centers in Hanoi and Ho Chi Minh City.

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Currently, most companies participating in Vietnam’s data center segment are domestic telecommunications companies such as Viettel IDC, NTT Global Data Centers, FPT Telecom, CMC Telecom, HTC Telecom International , VNPT and VNTT. IT infrastructure providers include HP, Deli, Cisco System, Fujitsu, Hitachi, Huawei, IBM, Lenovo, NetApp, NEC Corp and Oracle.
The government aims for Vietnam to become an important digital center. Vietnam’s data center market is forecast to grow to 1.04 billion USD in 2023, up from 561 million USD in 2022 and achieve a compound growth rate of 10.7%. According to Viettel IDC, accelerating the commercialization and technology of 5G is essential to meet Industry 4.0 movements such as AI, Big Data and IoT.
The government has a Digital Transformation Program with the goal of moving 50% of business activities to digital platforms by 2025. Vietnam’s 5G connectivity supports the deployment of edge data centers and provides connectivity Last mile services have lower latency. In February 2022, the Ministry of Information and Communications announced a plan to research and develop 6G technology to meet the needs of the fastest growing technology sectors.
Across the country, there are currently 5 underground cable lines connecting to APAC countries, EMEA and the United States. Two upcoming cables expected from 2023 to 2024 include Asia Direct Cable (ADC) and Southeast Asia-Japan Cable 2 (SJC2).
Mr. Thomas Rooney said that rapid growth brings risks and responsibilities to ensure data privacy, cybersecurity, sustainable resource consumption, reliability and service quality. This means Vietnam must address the challenges and opportunities of cloud computing, colocation, enterprise and edge computing and their role in promoting the country’s digital future.
Also according to Mr. Thomas: “Developing the data center portfolio in the Asia-Pacific market is very potential, but will take time due to the current fragmented nature of the industry. However, the growth of this sector is a testament to the potential it holds. The most recent data from Savills World Research highlights that while core investment strategies may dominate in 2024, the market will continue to see increased investment in data centers.”
According to Ms. Trang Bui, data center lease contracts are mostly long-term contracts and rental demand is less affected by cyclicality like traditional rental real estate, which helps investors enjoy benefits. more stable and long-term, not to mention profits from data center real estate offerings tend to increase higher than other traditional rental real estate products. Meanwhile, according to a statistic from JJL Vietnam, the revenue of data centers around the world is currently growing at an annual growth rate of 15.7%. In 2021, while real estate investment trust activity overall decreased by 12%, data center real estate investment trust activity increased by an average of 25% compared to previous years.

Source: redsunland.vn

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