Malaysia has ended 2024 as Southeast Asia’s top data center hub with $23 billion investments, solidifying its position as Southeast Asia’s leading digital hub, Knight Frank said Monday.

The global property consultant said in its released its Data Centre Research Report 2024 that Malaysia ranked first in the index for the second consecutive year, as the country recorded a significant annual take-up of 429 MW, outperforming regional peers.

This growth is driven by strategic investments from tech giants like Microsoft, Amazon Web Services (AWS), Google, and Oracle, totaling $23.3 billion.

Currently, the country hosts 54 operational data centers with a 504.8 MW capacity, with Johor leading in information technology (IT) capacity and Klang Valley remaining a core market.

Other emerging hubs include Sarawak, Negeri Sembilan, and Kedah.

Overall, Malaysia secured MYR 141.72 billion ($31.56 billion) in digital investments in the first ten months of 2024 — triple 2023’s total.

The nation is redefining its role in the global technology landscape, driven by innovation and strategic growth in the digital economy, said the statement.

“Malaysia’s strategic efforts in digital infrastructure are not just a blueprint for the region but a call for global players to seize this unparalleled opportunity,

“The country’s commitment to technological innovation and sustainability makes it a preferred destination for data center investments and a model for economic resilience,” said Keith Ooi, Group Managing Director of Knight Frank Malaysia.

Amy Wong, Executive Director of Research & Consultancy at Knight Frank Malaysia, added that Malaysia’s position at the top of the SEA-5 Data Centre Opportunity Index for two consecutive years underscores its regional leadership in the data center industry.

“With an impressive annual take-up of 429 MW and a GDP growth forecast of 5.5 percent for 2025, Malaysia’s robust infrastructure, strategic investments, and forward-looking policies continue to set it apart,

“This dominance not only reinforces Malaysia’s competitive edge in Southeast Asia but also signals the nation’s readiness to sustain long-term growth in the digital economy,” she added.

It is noted that the Malaysian government’s proactive measures, including the Green Lane Pathway and the Corporate Renewable Energy Supply Scheme (CRESS), are instrumental in shaping a resilient data center ecosystem.

By significantly reducing timelines for electricity supply and promoting renewable energy adoption, these initiatives have not only enhanced Malaysia’s infrastructure readiness but also underscored the country’s commitment to sustainability and technological advancement.

“As the world leans into green innovation, Malaysia’s leadership in renewable energy and sustainable data centers sets a precedent for responsible technological growth,

“By fostering strategic partnerships between real estate developers, data center operators, and supply chain companies, Malaysia is creating a dynamic ecosystem that drives industry evolution,” said Chelwin Soo, Director of Land & Industrial Solutions at Knight Frank Malaysia.

According to her, the synergy between public initiatives and private innovation positions Malaysia as a magnet for industrial growth, unlocking vast opportunities for both local and global players in the years to come.

Justin Chee, Executive Director of Valuation & Advisory at Knight Frank Malaysia, noted that as data center industry transitions into a stabilization phase, the focus on sustainability, energy efficiency, and innovation will define its future trajectory.

“Notably, Johor has emerged as a key player, surpassing Klang Valley in IT capacity and driving substantial land transactions for large-scale data centre developments,

“The exponential growth in Johor, particularly in areas like Kulai and Iskandar Puteri, is attracting major international operators and creating significant opportunities for land acquisitions and partnerships,” he added.

Meanwhile, he noted Klang Valley continues to evolve, with a strong pipeline of large-scale data centers such as those planned by Google and AWS.

“By striking a balance between regulatory frameworks, technological advancements, and strategic land acquisitions, Malaysia is well-positioned to lead the way in sustainable data center growth across the region,” he said.

The report also paints a promising picture of the data center industry, showcasing its potential to drive economic growth, create high-value jobs, and lead the way in sustainable practices.

As Malaysia continues to solidify its position in this vital sector, it noted the collaboration between government, industry players, and educational institutions will be essential in fostering a thriving data center ecosystem.

According to the report, the increased interest from global technology companies reflects the Malaysian government’s ongoing efforts to enhance the country’s digital economy.

It is noted that Malaysia’s key initiatives have focused on strengthening infrastructure, establishing clear regulatory frameworks, and promoting sustainability, which are the factors critical for the development of a robust data center ecosystem.

These measures provide a structured foundation for the sector’s growth, supporting both the physical expansion of data centers and the optimization of their operations.

Such developments position Malaysia to meet rising regional demand for digital infrastructure while fostering a stable investment environment.

Moving forward, the report opined that the data center industry in Malaysia will move into a stabilization phase.

With the private sector actively playing its role in utilizing technology to reduce carbon footprints through innovation and bringing in best practices to the country, it is anticipated that the government will take an adaptive approach in its approach to the industry, fostering an investor-friendly environment through regulations, guidelines, and policies that balance sustainability and technological growth.

Overall, the SEA-5 data center market boasts a total capacity exceeding 3GW, consists of both operational facilities and pipeline developments.

This represents a significant increase of 1.7GW compared to 2022.

Over the past year, there has been notable growth in cloud regions across these countries, said the report.

For example, AWS has expanded into Malaysia and Thailand, while Oracle Cloud has established a presence in Malaysia, and Microsoft has announced plans for a new data center region in Thailand.

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