Southeast Asia’s Data Centre Capacity Plans
Southeast Asia is planning a significant fourfold increase in data centre capacity, according to research firm Arizton. The region’s investment in data centres is projected to surge from $15.72 billion in 2025 to $35.08 billion by 2031, representing a compound annual growth rate (CAGR) of 14.32%.
Current and Planned Capacity
Currently, Southeast Asia has 306 operational data centres and 173 more in the pipeline. The planned capacity is nearly four times the existing operational capacity. Arizona’s forecast sees regional capacity reaching 1,435 MW by 2031, spanning 5.83 million square feet of white floor space.
Cost and Location Trends
Cost is a significant factor in data centre development across the region. Construction costs range between $7 million and $11 million per megawatt, varying by country. Limited land availability, labour rates, and access to power contribute to these elevated costs.
Malaysia leads the region in announced data centre capacity, with over 6 GW of IT load planned, predominantly in Johor. As of November 2025, Johor had approximately 4.0 GW of upcoming capacity, with around 700 MW under construction and 3.3 GW in the planned or announced stage.
Economic Drivers
Economic incentives play a significant role in Malaysia’s data centre attractiveness:
- Industrial electricity rates: Range between $0.06 and $0.09 per kWh in 2025.
- Construction costs: Around $8 million to $10 million per megawatt.
- Investment tax allowance: 100% on qualifying capital spending for 5-10 years, with a corporate tax rate as low as 0-10%.
However, new data centre tariffs implemented in July 2025 could increase energy costs by 10-14%, impacting operators’ decisions.
Green Initiatives
Malaysia aims for 70% renewables in its power mix by 2050 through solar, hydropower, and green hydrogen. The Corporate Green Power Programme offers a quota of 800 MW of solar generation, encouraging data centre operators to source green energy through virtual power purchase agreements.
Regional Contrasts
- Singapore, having imposed a moratorium on new data centres from 2019 to 2022, now has 45 operational centres and only six in the pipeline. Its additions are the smallest in the region, with 356,000 square feet and 89 MW by 2031. Future development will focus on efficiency.
- Thailand is experiencing the fastest growth in data centre capacity.