The Asia Pacific region has seen explosive growth in the past two years, driven in large part by hyperscalers and the rising demand for AI-ready data centers.

Last year alone saw 1.6 gigawatts of capacity added to the Asia Pacific market.

A key beneficiary in this growth is India, which is shaping itself to be the next data center powerhouse in the Asia Pacific region, as rapid digitization, infrastructure construction, and data center-friendly policies draw attention from hyperscalers.

In a recent DCD Broadcast, Azzurra Catterino, head of customer strategy and insight at DCD>Intelligence, explores this with a panel of experts and discovers the major factors and players in this rapid growth.

Mega trending

Among the panel is James Normandale, Cushman & Wakefield’s APAC head of technical services, Data Center Group.

According to Normandale, the Asia Pacific market is growing substantially, with increasing investment over the last two years and more expected in 2026. The overall market currently stands at about 12.7GW, and is anticipated to grow to 14GW by the end of 2025.

“We’re seeing a number of institutional and private equity investors coming into Asia Pacific, with joint venture partnerships and M&A on the rise,” Normandale says.

In key markets, such as Japan, South Korea, and India, Normandale says we’re seeing “mega trends” as larger data centers come to market across the board and drive investment across the Asia Pacific region.

Surajit Chatterjee, managing director and head of data centers, India, at CapitaLand, says that the primary growth drivers have been the digitization wave, advent of AI and machine learning, and increased infrastructure support made available in various countries in the region.

The key enablers of this, according to Chatterjee, are the hyperscalers and cloud players “who have really ramped up their setups.”

Another panellist, Deepak Yachameneni, executive director, asset management, at Everstone Group, argues that the data center industry in the Asia Pacific region is poised to be “bigger than North America.”

“That doesn’t come as a surprise because 60 percent of the world’s population is based in this area. And I believe that there is significant growth yet to happen in the region,” he says.

This growth will come from many different areas — the region’s emerging markets are many. India, Malaysia, Indonesia, Thailand, and the Philippines are already experiencing significant expansion and are expected to become bigger players in the market.

Johor, Malaysia, for instance, is setting itself up as one of the fastest growing data center hubs in Southeast Asia, with a surge of activity due its strategic location and supportive government policies.

Driven by rapid digital adoption and government initiatives, Yachameneni, Normandale, and Chatterjee all view India as a major driver of growth in the Asia Pacific region and see it as the country best placed to become the next data center powerhouse.

Open for business

Chatterjee credits new government policies for India’s attractiveness as a data center hub.

“A major step was the government realizing this is a very critical asset class,” he explains, “today, their policies are very friendly toward investors and operators setting up data centers across the key markets.”

To evidence this growth, before the Covid-19 pandemic India sat at roughly between 350MW and 400MW of output capacity. Chatterjee says that the country is now hitting 1.2GW, and will likely cross the 2GW mark in the next two or three years.

India has also emerged as a strong OEM manufacturing base, as Yachameneni notes. This gives “greater confidence in the lead times that some of this equipment has been subject to post-Covid,” he explains, “that’s another factor that’s driving a lot of hyperscaler interest in expanding into India.”

Normandale describes India as “open for business and friendly to foreign investment,” with great power networks across the country.

“From a capital lending perspective, from an international attractiveness perspective, it remains a powerhouse,” Normandale says.

Growth opportunities

India is vast and, with such a surge in growth, there are lots of opportunities for new data center locations across the country.

Chatterjee believes Mumbai and Hyderabad will lead in the meantime, but the country is already seeing new locations rising as data center hotspots. For example, he identifies the new cable landing station being built in Digha.

“For the next at least three to four years minimum, I think Mumbai and Hyderabad will continue to lead, followed by markets like Chennai, and some markets that will come up like Kolkata and Pune,” he adds.

Yachameneni identifies the National Capital Region and Delhi as key markets for the data center industry in coming years, predicting that India’s government will become a bigger demand driver.

“So far, we’ve only seen very small pieces of that emerge as far as India is concerned. Over the world, when you look at deployments, you will see a pronounced preference for the capital regions to deploy more of the government-related workloads,” he explains.

“Sovereign cloud has been under discussion for a very long time but little has been done so far. I believe that, over the next three to five years, a lot of activity will start emerging from the government.”

He continues: “These are sizable contracts and, when executed, will start bringing the needle back to Delhi as a market, which has so far been relatively quiet, with just a few enterprise clients occupying it with little hyperscale activity.”

“But that could change significantly because all the hyperscalers would aggressively bid for these sizable government contracts when they start getting doled out.”

Normandale says that India is well placed to plan and build out gigawatt campuses.

He adds: “The likes of Google, Reliance, and Yotta all have campuses planned in India and there are national programs in terms of digitalization.”

Google is reportedly set to invest $6 billion to develop a 1GW data center in Andhra Pradesh, including $2 billion in renewable energy capacity to power the facility. Alongside it, Reliance Industries is planning to build the ‘world’s largest’ data center in Jamnagar, Gujarat — a reported planned capacity of 3GW.

These investments are massive, some of the biggest the Indian data center market has ever seen, and will no doubt position India, and by extension the Asia Pacific region, as one of the key data center markets in the world.

Watch the full DCD Broadcast here.

To learn more about the new DCD>Intelligence platform, click here.