AI boom fuels demand for major data centre deals in Asia-Pacific this year

The intense pace of deals in the world’s most populous region comes as countries and companies respond to increasing demand for AI, which calls for more data capacity, industry executives said.

In 2023, the region’s data centre deals hit a record high of US$3.45 billion, according to LSEG. That tally is set to be surpassed this year, with at least a couple of large transactions in the pipeline.

AirTrunk, Blackstone, Macquarie and PSP declined to comment.

“The AI revolution is creating an unprecedented wall of demand for high-quality data centre capacity,” said Garren Cronin, managing director of Cadence Advisory, which advised on Australian data centre operator NEXTDC’s US$861 million fundraising in April.

“The new capacity that needs to be built in the Asia-Pacific in the next three to five years is simply mind blowing. My expectation is that deal flow in the data centre space will intensify in 2024.”

Telkom’s senior vice-president of investor relations, Ahmad Reza, told Reuters on Wednesday that the company is open to strategic partnerships to bring its data centre business arm, NeutraDC, new capabilities and into new markets.

“We have explored several potential partners, but we are still evaluating for the best one,” Reza said. “We expect to finish this process by the end of this year.”

NEC said it was not able to comment on market speculation.

The firm would actively invest in additional projects, with a particular focus on Japan and South Korea, said Nikhil Reddy, head of Asia-Pacific real estate at GSAM.

“AI creates a different type of need for data centres beyond the historic demands of the cloud focused on low latency. Now with AI, which entails massive data consumption, capacity is key,” he said.