Increasing digital usage drives need for hyperscale requirements

• Smartphones are now used by approximately 93.5% of the population of Singapore who use their devices for purposes like scanning QR codes, making digital payments and also socialising via various communication applications.
• The most commonly downloaded Android applications in Singapore include Facebook, WhatsApp Messenger, Instagram, Telegram, TikTok and Cap Cut – Video Editor, driving a need for capacity for the companies that own them — Meta, Alphabet and Byte Dance.

Supply moratorium impacts growth of DC market

• Singapore government agencies have not approved new data centre construction on new or existing sites since 2019.
• No new retail colocation data centres have come online in Singapore since 2021, when Equinix SG5 IBX, Digital Loyang II and STT Loyang opened. Google’s third data centre came online in August 2022 and other cloud/hyperscaler data centres completed construction in 2022. Meta’s data centre is scheduled to come online in 2023.

Innovations in efficiency and new sustainability options explored

• In July 2022, EDB and IMDA launched a pilot Data Centre – Call for Application (DC-CFA) for data centre operators seeking new capacity in Singapore. Applications recently closed in December 2022.
• To support their DC-CFA applications, many operators began exploring new technical innovations for improving data centre efficiency as well as developing sustainable sources of energy including hydrogen. Data centre and cloud companies are now opening educational institutions in Singapore to address the data centre skills shortage and demonstrate their contribution to the local economy.

Outlook: Despite healthy investment appetite, volume of deals may fall

• The restrictions on new supply in Singapore are creating new opportunities in alternative Southeast Asian markets. There is strong interest in Batam (Indonesia) and Johor Bahru (Malaysia) as alternatives to the tight Singapore market.
• Singapore’s role as Southeast Asia’s data centre hub currently remains secure due to many already-established advantages, despite the creation of the Batam and Johor Bahru spillover areas.