Analysts see data centre investment revving up

New data centre investments in Thailand could accelerate over the next 3-5 years as global data usage is surging, with the electronics, industrial estate, contractor, and power plant sectors set to be the major beneficiaries, say analysts.
Google announced its plan earlier this week to invest US$1 billion (32.6 billion baht) in data centres and cloud services in Bangkok and Chon Buri. The investment is expected to create 14,000 jobs in the country and boost Thai GDP by 140 billion baht, or 0.9 percentage points in terms of annual GDP during the period 2025-2029.
According to the Board of Investment (BoI), 46 projects concerning data centres and cloud services worth nearly 168 billion baht have applied for investment privileges.
Other companies seeking BoI investment privileges include Amazon Web Services (AWS), a unit of the US multinational tech firm, Australia’s NextDC for a 13.7-billion-baht project, India’s CtrlS for an investment valued at 5 billion, as well as Singapore’s STT GDC and Evolution Data, with outlays of 4.5 billion and 4 billion baht, respectively.
AWS projects capital expenditure of 200 billion baht through 2037, and has already invested 25 billion in the first phase to construct three data centres in Thailand, the BoI said.
“While Singapore has the highest data centre capacity among Southeast Asian nations, its challenges in terms of land and energy constraints could push prospective data centre operators to explore alternative locations in the region,” CGS International noted in its research.
“We believe new data centre investments in Malaysia, Indonesia, Thailand, Vietnam and the Philippines could accelerate in 3-5 years, with Malaysia and Indonesia likely to be the prime beneficiaries thanks to their location advantages, making them ideal gateways for international connectivity.”
Data centre growth has been driven by an extraordinary uptick in the usage of smartphones, tablets and devices utilising the Internet of Things, leading to an exponential rise in the amount of data generated and consumed daily.
Streaming, social media and remote work have significantly increased data traffic.
According to real estate consultancy JLL, total global storage capacity in data centres and end-point devices will grow at a compound annual growth rate (CAGR) of 18.5%, from 10.1 zettabytes in 2023 to 21 zettabytes in 2027.
The growing need for data storage also translates into demand for data centres, fuelling their rapid development. JLL predicts global data centre capacity reaching 45 gigawatts this year, rising to 72GW by 2029, implying a CAGR of 9.7%.
In Thailand, CGS believes SET-listed electronics manufacturer Delta Electronics is poised to benefit the most from data centre industry growth. Next in line are real estate players, particularly WHA Group and Amata Corporation, given potential big-ticket land sales, then contractors such as Infraset and submarine cable companies including Symphony.
Asia Plus Securities (ASPS) said increasing investments in data centres benefit power plant stocks. Data centres need to be powered 24 hours a day and consume a significant amount of power. Thai power plant players are expected to expand their renewable energy capacity to support growing demand.
Among industrial estate players, WHA is likely to win more data centre projects than its peers because it focuses on new economy industries and aims to transform into a tech company, said ASPS.
Other major beneficiaries are in the ICT sectors because cloud companies need to connect with target clients and utilise telecom infrastructure, noted the brokerage.