Participation in BRICS, CPTPP, and rising FDI set to fuel data centre growth
08 Mar 2025
Malaysia’s active participation in BRICS and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), coupled with a surge in foreign direct investment, is poised to drive long-term growth in the country’s real estate market, particularly in the commercial and industrial sectors.
According to Juwai IQI, more than RM57 billion has already been committed to data centre development, with the total investment pipeline projected to reach RM149 billion — a strong testament to sustained investor confidence.
Kashif Ansari, co-founder and group chief executive officer of Juwai IQI, anticipates that the market will maintain its robust momentum into 2025, fueled by advancements in artificial intelligence (AI), rising investments, and the expansion of industrial and commercial segments.
Malaysia recently secured the top position in the Knight Frank SEA-5 Data Centre Opportunity Index (SEA-5 Index), reaffirming its status as a leading data centre hub in Southeast Asia.
The SEA-5 data centre market, comprising Malaysia, Indonesia, Thailand, the Philippines, and Vietnam, boasts a total capacity exceeding 3 gigawatts, including both operational facilities and projects in development. This reflects a significant increase of 1.7 GW compared to 2022.
The data centre market in Malaysia is experiencing rapid growth, driven by rising demand for cloud computing, AI, and digital transformation. With an annual take-up of 429 MW, Malaysia surpasses other regional players like Indonesia (93 MW) and Thailand (31 MW), fuelled by robust growth in Johor and increasing demand in the Klang Valley.
“The data centre industry is one of the hottest sectors we’ve seen in decades. Despite its rapid expansion, industry players remain confident that demand will stay strong. Entering the data centre space isn’t an unusual move, and the sector has yet to overbuild capacity. For many investors, data centres offer stable returns in both boom and downturn periods, much like bonds,” said a market insider.
At a recent seminar hosted by Knight Frank Malaysia, titled “Unlocking Opportunities in Malaysia’s Booming Data Centre Ecosystem,” industry experts explored the country’s growing demand for data infrastructure and its crucial role in meeting global digital needs.
Allan Sim, senior executive director for land and industrial solutions at Knight Frank Malaysia, said, “Malaysia is at the forefront of attracting high-value industrial and logistics investments. With strong fundamentals and investor-friendly policies, we see significant opportunities for businesses to thrive in this market.”
Sigrid Zialcita, chief executive officer of the Asia Pacific Real Estate Association, added, “The rise of Malaysia, particularly Johor, as a prime destination for industrial and digital infrastructure investment underscores its growing importance in the regional economy. With the Johor-Singapore Special Economic Zone creating new avenues for growth, Malaysia is poised to attract more institutional capital, reinforcing its position as a strategic gateway to Southeast Asia.”
Malaysia – a digital investment powerhouse
Malaysia continues to strengthen its position as a digital investment powerhouse, attracting RM141.72 billion in digital investments during the first 10 months of 2024 — nearly triple the approved digital investments for the entire year of 2023 (RM46.2 billion). These investments are projected to create 41,078 job opportunities.
The country has emerged as a preferred destination for global cloud service providers, including Microsoft, Amazon Web Services (AWS), Google, and Oracle. Collectively, these tech giants have committed US$23.3 billion to cloud and infrastructure development across Malaysia.
Among the standout investments is NVIDIA’s US$4.3 billion initiative in Johor to establish advanced AI infrastructure. In May 2024, Microsoft announced a US$2.2 billion investment over the next four years to enhance its cloud and AI capabilities in Malaysia. Google followed suit with a US$2 billion plan to build its first data centre in Elmina, Selangor, and create a dedicated cloud region.
ByteDance is also making a significant move, committing US$2.1 billion to develop an AI hub in Malaysia. AWS has pledged US$6.2 billion through 2038 for the launch of the AWS Asia Pacific Region and local data centre services, while Oracle plans to invest over US$6.5 billion to open a public cloud region in Malaysia by October 2024.
These large-scale investments underscore Malaysia’s growing prominence in the digital economy and its strategic role in global cloud and AI infrastructure development.
As of the end of 2024, the SEA-5 Index reported 54 operational data centres in Malaysia, offering a combined live IT capacity of 504.8 MW. The Klang Valley remains the primary hub with 37 facilities, followed by Johor with 12. Other emerging data centre locations include Penang (3), Sarawak (2), as well as Negeri Sembilan and Kedah.
Malaysia’s data centre capacity is set to expand rapidly, with plans to add up to 1,400 MW over the next five to 10 years.
While most data centres in the Klang Valley currently operate on a smaller scale, with capacities below 20 MW, the region is poised for significant growth. Google and AWS are planning large-scale facilities exceeding 100 MW, while Cyberjaya is set to host a 200 MW campus by EdgeConneX and a 256 MW campus by Vantage Data Centres.
Johor’s data centre market stands out, with 53 per cent of planned facilities expected to have an IT capacity of 100 MW or more. Currently, 78.6 per cent of Malaysia’s operational IT capacity is based in Johor, and the state is on track to cross the 1 GW capacity mark in the coming years as pipeline projects come online.
In October 2024, K2 Strategic — a unit of the Kuok Group led by Kuok Meng Wei, grandson of founder Tan Sri Robert Kuok — opened a 60 MW data centre in the 700-acre Sedenak Tech Park in Johor.
K2 Strategic is now the third-largest data centre operator in Johor, following Bain Capital’s Bridge Data Centres (126 MW) and DayOne, a unit of China’s GDS (115 MW). Other notable players include Warburg Pincus-backed Princeton Digital Group and YTL Corp Bhd, which has partnered with AI chip developer NVIDIA.
Source: NST
