Despite macroeconomic uncertainties, the data center sector continues to attract strong interest from investors. The growth rate in 2022-2023 is very strong with load capacity across the Asia Pacific region reaching more than 10 GW. Cushman & Wakefield forecasts this growth momentum to continue in 2024, with 3.4 GW of capacity under construction and 8.8 GW of capacity in planning.
Over the past two years, we have also seen a sudden increase in storage and processing demand from the AI (Artificial Intelligence) and ML (Machine Learning) industry, driving a sharp increase in power consumption of data centers. Specifically, the average load capacity per rack has increased to 30-60kW and is expected to reach 100-125kW to meet the needs of AI. The total capacity of a center has increased from 25MW-50MW to 100MW-300MW. The rise of artificial intelligence and machine learning has convinced investors to quickly pour money into this sector.
Mature markets such as Singapore, Tokyo, Sydney, Beijing and Shanghai are attracting the most interest, followed by Hong Kong, Mumbai and Seoul. Demand mainly comes from providing cloud services to customers from the banking, finance, insurance, telecommunications, e-commerce and government services.
Emerging markets are equally attractive with growing domestic demand. Specifically, global cloud service providers have planned to enter Auckland, Bangkok, Busan, Kuala Lumpur, Osaka, Pune and Taipei; Interest from operators, developers and colocation operators to invest in these emerging markets will open up many opportunities for rapid growth in the coming years.
Compared to the abovementioned markets, Vietnam is still in its infancy. While major international cloud service providers have not yet established their presence here, several international carriers are present through cooperation with local telecommunications companies. Projects are deployed by domestic companies on a small and medium scale in Ho Chi Minh City and Hanoi, with a total current capacity of 45 MW, a growth rate of 6.63% CAGR in the period 2022 - 2027, according to Cushman & Wakefield’s latest data centre report.
“Vietnam has a rapid population growth rate with a rising middle class that accounts for more than 80% of Internet users and is still actively adopting digital banking and business activities. Despite possessing many advantages, Cushman & Wakefield's data shows that Vietnam is the place with the biggest shortage of data center infrastructure globally in terms of population”, shared Trang Bui, Country Head of Cushman & Wakefield Vietnam.
Table comparing population and load capacity of Vietnam and Singapore
| Country | Population | Live MW | Pop. / MW |
| Vietnam | 98,858,950 | 45 | 2,195,890 |
| Singapore | 5,673,743 | 975 | 5,819 |
Source: Cushman & Wakefield
With this rapid growth, AI is likely to reshape the data center market in the coming years. However, unlike traditional data centers that always prioritize the most favorable locations, AI and ML data centers can be built within a radius of 450 km to 1,000 km from big cities that are capable of providing uninterrupted power supply.
With these requirements, the Southern provinces of Vietnam could be a popular destination thanks to their abundant land fund, available power sources in industrial parks, and the country's largest cable docking stations with the country's largest bandwidth in Quy Nhon, Da Nang & Vung Tau. In addition, renewable energy accosunts for 1/4 of the national energy structure, with many different energy sources, of which the wind and solar power industries are quite developed.
For foreign investors, "Data center service business" is a conditional investment and business industry in the Investment Law 2020. However, up to now, there is still no normative document providing detailed guidance on business conditions and requirements for this industry.
We predict that investors will continue to be interested in getting a piece of this pie, but the main interest will lie in a larger project scale instead of building many small facilities. The potential that the data center industry offers is clear with the explosion of AI and ML and this type of asset will also serve as a key component in supporting digital transformation across the country. Therefore, although it is still in its early stages, we expect the data center industry will soon have effective investment attraction policies to serve investment needs in the near future.
