Moody's Projects 24% Annual Growth for South and Southeast Asia Data Center Market Through 2030
May 25, 2026
Moody's Projects 24% Annual Growth for South and Southeast Asia Data Center Market Through 2030
Moody's Ratings has forecast that the data center market in South and Southeast Asia (S&SEA) will expand at a compound annual growth rate (CAGR) of 24 percent over the next four to five years, a projection that underscores the region's rapid transformation into a critical hub for global digital infrastructure. The region currently accounts for over 3.5 gigawatts (GW) of operational data center capacity, and Moody's expects that figure to double by 2030, driven by a shift in investment toward emerging markets.
According to a note released by the rating agency on Monday, growth will increasingly disperse to markets such as India, Malaysia, Indonesia, Thailand, and Vietnam. These countries benefit from a combination of expanding domestic demand and spillover regional demand, the latter fueled by power, land, and regulatory constraints in more established hubs, as well as geopolitical factors. Unlike North America, where frontier AI training drives much of the growth, Moody's anticipates that a larger share of incremental capacity in S&SEA will be powered by traditional workloads, including cloud migration and AI inferencing. This reflects the region's large, underserved population base and the relatively early stage of its data center development. Some markets may also see near-term demand for AI training focused on local language models, the agency added.
Moody's described Southeast Asia as evolving into a multi-hub data center ecosystem anchored by Singapore, which remains the region's largest and most mature hub with an estimated 1.0 GW of installed capacity. Singapore's role as a regional connectivity gateway, supported by extensive submarine cable links and a stable regulatory framework, underpins its dominance. However, capacity expansion in the city-state has become increasingly constrained by land and power limitations, as well as sustainability requirements. This has prompted operators and hyperscalers to adopt a hub-and-spoke model, where Singapore functions as a core interconnection and control node while additional capacity is developed in surrounding markets.
This shift has particularly benefited Malaysia, especially the state of Johor, which has positioned itself as a cost-efficient alternative to Singapore. Over the past five years, Johor has transformed into one of the most dynamic and fastest-growing data center hubs in the region, now a significant market within Southeast Asia. Its growth has been supported by relatively abundant land, available power infrastructure, and attractive investment incentives. With around 897 MW of installed capacity and a significant development pipeline, Johor is increasingly integrated into Singapore-linked deployment strategies. Moody's noted that Johor has successfully capitalized on regional capacity constraints to become a key destination for hyperscalers, evidenced by significant investment commitments from Microsoft and Oracle, alongside the launch of new cloud regions, building on ByteDance's earlier deployment.
Meanwhile, Indonesia, led by Greater Jakarta and emerging nodes such as Batam, has also grown rapidly, with capacity exceeding 300 MW. Its growth is driven primarily by its large domestic digital economy, data localization requirements, and strong demand from both global hyperscalers and local technology players. Beyond these core markets, Moody's said Thailand and Vietnam are developing as mid-tier but accelerating data center markets, supported by rising enterprise demand and increasing cloud adoption. In Thailand, Bangkok and the Eastern Economic Corridor are the primary hubs, while Vietnam's Ho Chi Minh City and Hanoi are emerging as key centers. "Both markets are still in earlier stages of hyperscale penetration but are attracting increasing interest as part of regional diversification strategies," Moody's stated. The Philippines remains a smaller but steadily expanding market, with activity concentrated in Metro Manila and driven by enterprise demand and the business process outsourcing sector.
The rating agency highlighted that hyperscalers are increasingly pursuing build-to-suit campuses and joint ventures with data center developers, particularly in India, Indonesia, and Malaysia, to secure power and land, ensure faster scaling, and improve cost certainty amid rising power and construction costs. Growth is further supported by Chinese hyperscalers expanding outside their home market. "In response, Chinese data center operators have established subsidiary operations in emerging data center markets in Southeast Asia, particularly Malaysia, Indonesia and Thailand, to support multinational clients," Moody's said. It noted that favorable diplomatic ties and fewer external regulatory barriers allow Chinese operators to continue scaling their regional presence. For example, GDS Holdings' subsidiary, DayOne Data Centers Limited, operates across Singapore, Malaysia, Indonesia, Thailand, and Japan, while Bridge Data Centres is expanding rapidly in Malaysia and Thailand.
Moody's warned that the expansion of large, established Chinese data center operators into Southeast Asian markets is likely to intensify competition, as these companies typically benefit from scale, stronger financing, and advanced technological expertise, enabling more competitive pricing and service levels than local providers. Overall, the agency sees the pace and distribution of growth increasingly depending on power availability, grid stability, and execution capability. Constraints in mature hubs are pushing incremental investment toward emerging markets, while data localization rules and government incentives continue to underpin demand.
Source: technode
