Singapore unlikely to draw large-scale data centre investments despite added capacity: Report
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An Equinix data centre in Singapore. A report by BMI says the allocated capacity in Singapore is not enough to meet the load requirements for data centres in South-east Asia.
PHOTO: EQUINIX
Janice Lim
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SINGAPORE - Singapore is unlikely to attract large-scale investments in data centre capacity from foreign investors, despite its recent plans to increase its capacity
This is because the allocated capacity in Singapore is not enough to meet the load requirements for data centres in South-east Asia.
Momentum for data centre investment is also growing rapidly in other markets outside Singapore, especially in Malaysia.
Singapore recently announced that it aims to provide 300 megawatts (MW) of additional capacity in the near term, with another 200MW that could be added for operators who tap green energy.
This is in a new road map, launched by the Infocomm Media Development Authority (IMDA), which charts ways Singapore can develop sustainable data centres.
Responding to queries from The Business Times, an IMDA spokesperson said the 300MW of additional capacity is a base to seed innovation for the industry to work together on ways to improve energy efficiencies and mobilise green energy for more capacity.
“The road map charts a pathway for the data centre sector to innovate and pioneer solutions, not only to support Singapore’s international climate commitments, but also to help address the global challenge that countries face for data centre growth.
“Singapore remains attractive as data centres tap its broader international position as a business and digital hub,” said the spokesperson.
A moratorium on data centres in Singapore between 2019 and 2022 prompted a rapid migration of such centres to elsewhere in South-east Asia, in particular Johor in Malaysia and Batam in Indonesia.
Their proximity to Singapore, their regulations, as well as the lower costs of electricity and labour have led to surging volumes of data centre investments in these two markets.
The BMI market report estimates data centre capacity in Johor to be over 1,800MW; in Batam, it stands at 285MW. Including previously announced permits that Singapore has awarded to Equinix, Microsoft, GDS and a consortium between AirTrunk and ByteDance to deploy data centres, the report estimates that this will increase capacity by a maximum of 80MW, bringing the total capacity for future developments to 380MW.
With this additional allocation, the researchers behind the report have revised Singapore’s live data centre capacity to 1,400MW, up from 876MW.
This new figure likely accounts for the multiple cloud and hyperscale data centres owned by Amazon Web Services, Microsoft and Google, which typically do not disclose their total IT loads, noted the report.
However, the researchers still think that this upsized capacity might be too little for the current South-east Asian data centre IT-load requirements.
“We believe it is unlikely that the initiative will rekindle large-scale foreign investor interest in the Singaporean data centre market, since neighbouring emerging markets are expecting over 2,500MW of data centre capacity in the near term,” said the report.
Moreover, the leased capacity in the Asia-Pacific continues to highlight the pressure that artificial intelligence puts on the current data centre infrastructure.
This raises uncertainty about the viability of 300MW of allocated data centre capacity, since bookings per customer mostly exceed 1MW, the report added.
This is based on information from data centre provider Digital Realty, cited in the BMI report, which indicated that almost 82.5 per cent of the total leased capacity in the Asia-Pacific between the first quarter of 2022 and the first quarter of 2024 were from hyperscale customers looking for capacity exceeding 1MW.
“This indicates that hyperscale customers are the most active entity looking to secure additional capacity from data centres,” said the BMI report.
It also noted that Digital Realty leased a total of 54.7MW from its data centres over that two-year period alone, raising a question mark over Singapore’s 300MW capacity allocation – especially when other key players in the Asia-Pacific such as Equinix, AirTrunk and STT are factored in.
Nonetheless, the report highlighted that Singapore’s road map is an industry first for a market imposing a temporary ban on data centres, and then following it with a new framework linked to sustainability.
While capacity may be limited, Singapore will play an increasingly important role in the energy transition of the data centre industry, the report noted.
“Overall, we note that the Singaporean Government, as well as the IMDA, will take a more prominent role in the industry as facilitators of a transition to renewable energy sources, next-generation cooling solutions and data centre design.
“We believe that such an approach tries to mitigate the risks associated with excessive regulation in the industry, which remains a key driver of data centre investment migration between markets,” it added.
IMDA said Singapore will build on its strengths, such as by beefing up international connectivity through the doubling of the number of submarine-cable landings over the next 10 years, and supportive cross-border data flow policies.
Said its spokesman: “This is an opportunity for the industry ecosystem to partner and collaborate with one another, and for the government to create innovation that overcomes the global constraints facing data centres.
“We welcome data centres that bring best-in-class technology and practices to drive energy efficiencies, green energy deployments, and contribute strategic and economic value to Singapore.”
