Data center market is booming

DNVN - In the race to attract investment in the field of artificial intelligence (AI), the data center market in Asia is a bright spot, witnessing a strong increase in the number of investment transactions.

According to Savills Vietnam, investment in the global data center market in 2024 has reached a new peak, in the context of increasing demand for artificial intelligence (AI). McKinsey research published in late 2024 showed that global demand for data centers could increase by 19-22% from 2023 to 2030 to reach an annual demand of 117 to 219 gigawatts (GW). While current demand is only at 60GW.

In 2024, technology giants such as Microsoft, Meta, Alphabet, and Amazon invested more than $200 billion, mainly in data centers and developing AI-related tools. Investments in data centers for AI development are expected to continue to increase in 2025, with many reports of large investments.

For example, Microsoft has announced a $128 billion investment plan to develop AI infrastructure and data centers globally, including a $3 billion deployment in India and $2.9 billion in Japan. Or US President Donald Trump announced the Stargate project to invest in data center infrastructure to support AI development in the US with an initial investment of $100 billion and an expected investment of up to $500 billion.

The continued growth of AI continues to increase the demand for infrastructure.

Savills Vietnam believes that most of the current data center supply in Asia is not yet equipped to host AI servers. Most of them are still data centers with a capacity of 10-40MW concentrated in developed markets. This is considered an investment attraction to upgrade and build new AI development data centers with larger capacity in this market.

In Southeast Asia, ASEAN economies have launched national AI strategies, typically Singapore’s NAIS 2.0, which integrates technology into many different fields. Vietnam’s strategy to 2030 clearly identifies AI as a fundamental technology field of the fourth industrial revolution, contributing significantly to creating a breakthrough in production capacity, enhancing national competitiveness and promoting sustainable economic growth.

Commenting on the data center market in Asian markets, Mr. Thomas Rooney - Deputy Director, Industrial Services Department, Savills Hanoi said that the demand for data centers in Asia is currently very large, especially in group 1 markets such as Seoul, Tokyo, Hong Kong, Kuala Lumpur, Singapore or Bangkok.

However, with high competition, these markets show a decrease in rental growth. Meanwhile, group 2 markets such as Johor, Hanoi, Ho Chi Minh City or Bengaluru show their attractiveness when they are in a period of rental growth.

Faced with regional competition, investment returns in Tier 1 markets have begun to decline, with average returns of around 5%. Meanwhile, data center investments in emerging markets such as Vietnam or India are expected to yield higher returns, ranging from 9.5% to 10%, thus attracting increasing interest from investors.

As demand continues to grow, a key challenge is the need for adequate power infrastructure to support the massive demands of AI data centers. Power supply is becoming an issue in markets that have already attracted data centers. Many data centers are finding that their current infrastructure cannot handle the capacity required, leading to the possibility that at some point, the current power supply will not be sufficient to operate the system.

Concerns about the strain data centers will put on electricity grids and climate targets have even led some countries to freeze new data center construction. Ireland, for example, has suspended the issuance of permits for data centers near Dublin until 2028. Ireland’s grid operators estimate that data centers will account for 28% of the country’s electricity use by 2030.

The continued growth of AI in 2025 is expected to continue to increase the demand for infrastructure, forcing the market to consider the location of data centers and ensure power supply in the context of increasing demand.

Ha Anh

Source: https://doanhnghiepvn.vn/kinh-te/soi-dong-thi-truong-trung-tam-du-lieu/20250206091254235