_Thailand's Data Centre Market Witnesses Impressive Growth in Q1 2023
The data centre industry in Thailand has experienced significant growth in recent years, driven by the expanding number of internet users and increasing reliance on digital infrastructure. However, the country's total IT capacity per capita remains relatively low compared to more mature markets like Japan, Singapore, and Hong Kong. To incentivize investment in data centres, the Board of Investment (BOI) offers an attractive package, including an 8-year Corporate Income Tax (CIT) exemption with no cap.
Additionally, entities that meet specific criteria can qualify for up to five additional years of tax exemption. This favourable landscape presents an excellent opportunity for local and international operators to establish a strong presence and tap into the growing demand for data centre services in the country.
In Q1 2023, Thailand's aggregate supply of data centres reached 269 MW, which represents a nearly 30% increase from the end of 2022. This growth can be attributed to the collaborative efforts of both established market leaders and new entrants. The market is expected to remain highly active throughout the year, with several noteworthy developments on the horizon. For instance, KDDI Telehouse recently completed its 9.5 MW facility in Rama 9, while OneAs1a is currently fitting out the first 3 MW of their 13.5 MW facility in Pathum Thani.
Looking further ahead, NTT Global Data Centers has announced the development of their Bangkok 3 Data Center, a 12 MW facility set to be operational in Chonburi in 2024. GSA Data Center recently held their groundbreaking ceremony for a 20 MW centre in Samut Prakarn, scheduled to be fully launched in 2025.
On the demand side, the increasing prominence of cloud services and the mounting requirement for data storage and data analytics have significantly contributed to Thailand's rising need for data centres. This demand is primarily driven by clients from various sectors, such as the finance industry (banking, securities, insurance), e-commerce platforms, healthcare providers, technology companies, and government agencies.
These domestic or multinational clients require robust data centre infrastructure to support their operations and manage their increasing volumes of data.
When it comes to the trends or developments that shape the data centre industry in Thailand, it is evident that over the past few years, the country has witnessed a substantial influx of international data centre operators entering the market, transforming the landscape and giving rise to hyper scalers—large-scale data centres.
Prior to this, the country had only a limited number of data centres with capacities of up to 5 MW. However, the establishment of new facilities has led to the emergence of data centres with capacities reaching 10 MW or higher, plus scalability options as per demand.
More recently, Thailand has become a focal point for global tech giants such as Google and Amazon Web Services (AWS), as they have announced their plans to establish cloud infrastructure hubs in the country.
This strategic expansion solidifies Thailand's position as a key digital hub within ASEAN. Meanwhile, Singapore, the region's most established data centre market, has implemented new restrictions, including specific criteria and a limited quota of 60 MW for new capacity each year.
These tightened regulations allow neighbouring countries to capitalize on the growing demand for data centres and attract international players seeking alternative locations for their operations.
On a global scale, there is a continuous focus on improving energy efficiency within data centres. Efforts are being made to decrease Power Usage Effectiveness (PUE) and enhance rack density to maximize resource utilization.
Additionally, many operators actively explore innovative solutions like liquid cooling for efficient thermal management and incorporating renewable energy integration to minimize environmental impact and achieve sustainability goals.
Fred Fitzalan Howard, Data Centre Lead APAC said: “The Thailand data centre sector has witnessed a remarkable acceleration in recent years as data centre operators look to capitalise on the increasing digitization of Thailand and its widespread Cloud adoption. As the sector gains prominence, investors are leveraging various strategies such as mergers and acquisitions (M&As), joint ventures, and land acquisitions to tap into this thriving sector.
With a selection of US and Chinese cloud providers publicly stating their intention to increase their exposure to Thailand, we expect to see a growth in deployment levels over the coming years as these providers lease significant capacity in order to operate dedicated Cloud regions.”
Marcus Burtenshaw, Executive Director of Knight Frank Thailand said : "As data-intensive technologies continue to evolve and digital adoption accelerates across sectors, we anticipate further investments in state-of-the-art facilities, innovative infrastructure solutions, and partnerships to support the growing data center needs in Thailand. This dynamic market presents a compelling opportunity for local and international stakeholders to capitalize on the country's digital growth story.”
Marcus adds "Finding suitable data center sites has presented a significant challenge for investors. With our extensive 25 years of experience in the local market, Knight Frank Thailand is uniquely positioned to assist investors in navigating the complexities of the local property market. Our expert team can help identify the most suitable sites tailored to their specific requirements, ensuring a seamless and successful investment journey."