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Asia Pacific data centre investment reached a record US$11.6 billion in direct deals in 2025 as the race for power availability reshapes where new capacity is being built across the region, according to a new CBRE report.
The 2026 Asia Pacific Data Centre Trends & Outlook report paints a picture of a market in transition, with growth shifting away from traditional hubs like Singapore and Hong Kong toward power-rich locations in Malaysia, India and Australia that can support the infrastructure demands of AI workloads.
Global hyperscale demand is growing at a compound annual growth rate (CAGR) of 14 per cent, while AI demand specifically has surged at a four-year CAGR of 98 per cent between 2023 and 2026, according to Goldman Sachs data cited in the report.
Big tech drives infrastructure buildout
The spending pipeline is vast. Big tech firms plan to increase capital expenditure by 61 per cent year-on-year in 2026 to support AI business growth.
Amazon has announced that its 2026 AI spend will reach US$200 billion, while Google plans investment of US$180 billion. U.S. hyperscalers are expanding across Asia Pacific, deploying data centres for cloud and AI usage alongside their home market investments.
Mainland Chinese tech companies are also stepping up. ByteDance has earmarked around US$23 billion in 2026, with Tencent and Alibaba planning smaller outlays.
The global data centre market remains dominated by cloud and corporate usage, with AI contributing less than 15 per cent of total workload as of 2025. However, that share is projected to reach 29 per cent by 2030, up from less than 3 per cent prior to 2023.
Power-rich markets lead regional growth
In terms of live capacity growth, Johor led the region in 2025 with expansion of 53 per cent year-on-year, followed by Melbourne with growth exceeding 30 per cent. Greater Seoul, Sydney, Mumbai and Greater Tokyo also recorded expansion in the range of 15 to 25 per cent.
Mature markets such as Singapore and Hong Kong SAR registered more modest growth, constrained by development limitations rather than a lack of demand.
“AI is reshaping how infrastructure is selected and deployed across Asia Pacific,” Matt Madden, Senior Managing Director, Data Centre Solutions, Asia Pacific for CBRE, observed. “For neocloud providers, access to power is increasingly outweighing traditional location advantages. This is directing demand toward markets that can support high-density campuses at scale, particularly across India, Malaysia and parts of Southeast Asia.”
Neocloud providers emerge as new demand driver
A key theme over the past 12 months has been the rise of neocloud providers, a specialised category of cloud operators designed specifically for high-performance computing workloads.
These providers first emerged in 2023-2024 and gained traction in 2025, offering GPU-as-a-Service to hyperscalers, AI labs and corporates. Global players include CoreWeave, Lambda and Nebius, while regional operators include Yotta, E2E Networks and Neysa AI in India, Firmus and Sharon AI in Australia, and Sustainable Metal Cloud in Singapore.
However, the report notes these operators often have shorter track records and weaker credit profiles than established hyperscalers. Landlords tend to favour operators with stronger financial backing, particularly where development involves debt financing.
South and Southeast Asia, excluding Singapore, hold high potential for neocloud development due to cheaper power, better access to sufficient power and permitting, and proximity to Singapore.
Power availability remains the challenge
Data centre expansion continues to outpace utility capacity across Asia Pacific. Electricity consumption by data centres in the region almost doubled between 2020 and 2024 and is expected to triple over the next few years.
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New builds are increasing in capacity, with average sizes now exceeding 100MW. Some markets are overcoming the lack of power availability by focusing on on-site infrastructure. In Japan, on-site gas cogeneration systems are being deployed to support power resilience. Developers of large AI data centres in Korea are increasingly looking beyond Seoul to new clusters.
Construction costs are also escalating. Turner & Townsend’s Data Centre Cost Index 2025 ranked Tokyo as the most expensive market, followed by Singapore. Kuala Lumpur has seen costs increase due to a surge in spillover demand from Singapore. India and mainland China remain cheaper markets due to lower labour and material costs.
Regional landscape shifts
CBRE has classified Asia Pacific data centre markets into three categories. Japan, Australia, mainland China, India and Malaysia are categorised as leading markets with high existing capacity and continued development. Singapore and Hong Kong SAR are classified as mature markets with high existing capacity but limited future pipeline. Thailand and Indonesia have moved into the high-growth category.
“Asia Pacific’s data centre market is undergoing a significant reordering,” Ada Choi, Head of Research, Asia Pacific for CBRE, remarked. “Growth is shifting from traditional Tier I markets toward power-advantaged locations. As AI adoption accelerates, Asia Pacific is expected to remain one of the most important global growth regions, with attractive opportunities in power-secure, AI-ready markets.”
India’s data centre capacity is surging, driven by demand from hyperscalers alongside factors such as the country’s 5G rollout, expansion of Global Capability Centres, data localisation laws and government initiatives. Mumbai remains the dominant Indian market, hosting more than 50 per cent of national capacity, with total stock potentially approaching 3GW in the medium term.
Malaysia continues to benefit from spillover demand from Singapore, with Johor a preferred market for hyperscalers and operators due to its proximity and lower construction costs. However, rising development costs and tighter power availability are now prompting hyperscalers to look elsewhere in Southeast Asia.
Australia draws major commitments
Australia’s data centre market continues to expand, with new capacity being absorbed rapidly. Most new supply is being taken up by hyperscalers rather than traditional enterprise colocation users.
Microsoft has pledged US$18 billion to expand its cloud and AI infrastructure in Australia by 2029, while Amazon has earmarked US$13 billion over the same period. OpenAI has partnered with NextDC to develop a hyperscale AI campus and large-scale GPU supercluster in Western Sydney.
The New South Wales government has moved 15 data centre projects worth approximately A$51.9 billion into its Investment Delivery Authority pipeline to fast-track approvals. Despite a near-term supply surge, Sydney and Melbourne are still projected to face a 1.5GW supply shortfall by 2028.
Australian neocloud provider Sharon AI has secured up to 50MW with NEXTDC to expand its footprint across Asia Pacific. Firmus expects to secure a US$505 million investment to accelerate deployment of AI data centres, including its flagship Project Southgate in Australia.
Investment channels diversify
Direct investment volume has grown steadily over the past seven years, with entity-level transactions reaching US$8.3 billion in 2025. Recent transactions include the KKR-led consortium with Singtel Group acquiring an 82 per cent stake in ST Telemedia Global Data Centres for US$5.1 billion, and DigitalBridge and La Caisse acquiring Yondr Group for US$5.8 billion.
In Japan, a joint venture between CapitaLand Ascendas REIT and a fund managed by Mitsui & Co. Realty Management acquired a 45.9MW hyperscale data centre in Greater Osaka for a reported US$997 million. Microsoft has committed to investing US$10 billion in Japan between 2026 and 2029 to expand AI infrastructure.
Yield trends have diverged across the region. In Australia and Japan, where interest rates have increased, yields have slightly expanded. Seoul and Singapore have reported modest yield compression, with government support for AI and a lack of large pipeline supply pushing up price expectations.
Korea pushes AI transformation
Korea’s government-led “AI for All” strategy is stimulating data centre demand. Availability in Greater Seoul remains tight, with colocation vacancy under 5 per cent and rents up by 10 to 20 per cent since the second half of 2025.
A Samsung SDS-led consortium has been selected as the developer for the National AI Computing Centre project in Haenam, South Jeolla, designed to host around 15,000 advanced GPUs. Hyundai Motor Group has signed a deal to invest over US$6 billion to develop an AI data centre and robotics hub in the Saemangeum development zone. Shinsegae Group is looking to set up a joint venture with AI lab Reflection to build a 250MW sovereign AI data centre at a reported cost of at least US$6 billion.
Singapore remains constrained
Singapore’s data centre market remains constrained by capacity, with occupancy above 95 per cent and low vacancy expected to persist. The government’s DC-CFA1 scheme has delivered four awards of approximately 20MW each, while DC-CFA2 is expected to provide at least 200MW in total.
Keppel has started construction on its 25MW floating data centre project, scheduled to go live in 2028. Digital Realty has pledged more than US$3.4 billion for new data centre development in the city-state.
Recommendations for operators and investors
CBRE advises investors to seek opportunities in mature markets such as Japan, Australia, Korea and Singapore, while also exploring Tier I cities in India and emerging Southeast Asian markets including Malaysia, Indonesia, Thailand and Vietnam.
Development opportunities can be found in non-core locations within leading markets, such as Hokkaido and Kyushu in Japan, and Melbourne and Perth in Australia, where land and power availability is greater.
The report warns that older facilities face higher vacancy risk as capacity demand increases and building specification requirements rise. Rising construction costs, shortages of skilled labour and increasing community and environmental pressure may weigh on development timelines and profit margins.
The full 2026 Asia Pacific Data Centre Trends & Outlook Report is available on CBRE’s website.
Last Updated on May 22, 2026 by Nick Ross
