SINGAPORE - Singapore has climbed up in the league of top markets for data centres, tying with the United States' Silicon Valley region for second place, out of 55 markets.
Real estate consultancy Cushman & Wakefield's 2022 Global Data Centre Market Comparison report, released on Jan 25, scored Singapore highly on key criteria such as market size, fibre connectivity and availability of cloud services.
It also recognised the Republic's pro-business policies, such as low tax rates.
Northern Virginia, the world's largest data centre market, took the top spot for the third year running.
Last year's iteration of the ranking placed Singapore fifth out of 48 markets.
The Republic is now the top-ranked market for data centres in the Asia-Pacific, ahead of Hong Kong, which ranks sixth, and Sydney, which slips from third last year to eighth.
Data centres are used by organisations to store, process and transmit large amounts of data.
Over the past two decades, Singapore has made great strides in establishing itself as a hub, leveraging its strong fibre broadband connectivity and strategic location.
According to the Speedtest Global Index by Ookla, Singapore has the highest median fixed broadband speed in the world. It is also the landing site for a dense network of undersea cables connecting it to other parts of Asia, Europe and Africa, as well as Australia and the US.
A change in Cushman & Wakefield's methodology for scoring markets on fibre connectivity partly accounts for Singapore's jump in the rankings. Previous reports had looked only at network density, while this year's adopted the Speedtest Global Index as a measure of overall broadband speed and performance.
The Covid-19 pandemic and resulting acceleration of digitalisation trends have inflated demand for data centres over the past two years.
Many major multinational corporations have flocked to Singapore to tap that demand. US operator Digital Realty has invested about US$1 billion (S$1.4 billion) to open three data centres since 2010.
Google has three Singapore data centres. Since 2011, the tech giant has invested about US$850 million in such centres here.
Last year, American digital infrastructure firm Equinix opened its fifth data centre here for US$144 million.
Facebook owner Meta Platforms is expected to open a US$1 billion data centre in Singapore - its first in Asia - later this year.
Trade and Industry Minister Gan Kim Yong on Jan 11 said there are more than 70 operational data centres here as at last year, with a total available IT capacity of about 1,000MW.
Northern Virginia has almost 1,700MW of operational capacity and is projected to be the first market to cross 2,000MW in the coming months.
Singapore's strong performance in the ranking comes despite a moratorium on new data centres that has been in place since 2019.
The release of state land for data centres and development of new data centres on existing state land were temporarily paused for the Government to conduct a review of how to grow the industry more sustainably.
Data centres consume vast amounts of electricity for running servers and keeping them cool.
In Singapore, data centres accounted for about 7 per cent of the country's total electricity consumption in 2020, according to the Ministry of Communications and Information.
The land for any centres that have opened since 2019 would have been acquired before the moratorium began.
The Government recently concluded its review, and new data centres will be subjected to higher standards of power efficiency.
Strong demand, coupled with stagnant supply, has made Singapore one of the tightest markets for data centres in the world, with a vacancy rate of under 2 per cent.
"While the moratorium is expected to be lifted soon, the tight supply situation could persist, with limited new supply coming into the market," said Ms Brenda Ong, executive director for logistics and industrial at Cushman & Wakefield.
"Singapore faces land as well as grid constraints, and has limited renewable energy options. This would be a limiting factor on new data centre supply, given the global sustainability push."
While much talk has centred on finding greener ways to build and run conventional data centres, some major players are thinking out of the box.
Keppel Data Centres is studying the feasibility of building floating data centres with attached power plants at sea, instead of vying for scarce land in Singapore. These data centres would also use sea water to cool their servers.
Some Singapore entities are looking to build and operate more data centres overseas.
Singapore's sovereign wealth fund GIC last week (Jan 27) announced a joint venture with Equinix to develop two facilities in Seoul.
Temasek-owned ST Telemedia Global Data Centres said last October it will set up two facilities in Tokyo.
Other companies such as Singtel and CapitaLand have invested hundreds of millions of dollars in regional data centres such as those in Thailand, Indonesia, China and India.