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Data centres create new real estate opportunities in Thailand

Growth in data storage driving interest in developing data centers

​With a rapid pace of growth and an endless demand for data storage many developers realize that data centers are becoming a more popular alternative real estate development option, according to property consultancy JLL. This is in response to the rising demand across all sectors in relation to the Internet of Things (IoT), cloud computing, IT outsourcing and mobile data.

Data Centers in Thailand in the recent past have generally been developed to serve a company’s sole requirement and were built specifically for them as a single occupier. These are generally managed and operated in house by those companies that are usually in the financial and government services sector.

There are just a limited number of Data Center Service providers in the Thai market at present, such as True IDC, CAT, NTT and TCCT.

Dexter Norville, a director at JLL, comments: “One common hurdle that many potential developers of data centers seem to face in Thailand, and most other Asean countries, is that many developers may have suitable land to construct a data center facility but they do not have the technology component. Alternatively, there are many technology companies that do not own or have access to the land that they would like to develop.”

Observations by JLL show there is growing interest in Thailand from local developers looking for advice on data center space, operators and joint ventures in this alternative market.

Mr. Norville says “The more viable option for many developers to potentially forge a market share in should, however, be in the provision of external data centers which can provide managed data hosting to multiple companies. These types of data centers basically provide a one stop shop whereby companies rent the servers and other specified equipment from the data center developer/operator and the operator will provide the expert management and operation of those systems.”

“Another alternative are co-location data centers which are generally referred to as the leasing of a secured space with all the required connectivity and the needed base built infrastructure. Users or tenants will then purchase their own servers and networking systems, as well have their own staff to manage these resources,” he adds. 

“A key driver for the increased interest to develop data centers is fundamentally the same as most real estate developments and it is financial, with rents currently ranging anywhere between THB 30,000 to THB 60,000 per rack.”

In 2016, the data center market in Asia Pacific was US$12 billion. According to JLL, the market size is expected to grow by 27% per annum and surpass the European market in total size by 2021. This increases the need for real estate space in this niche area.

Also of interest to developers in Thailand is that the current main two leading data center markets in the region which are Singapore and Hong Kong are increasingly facing future land shortages and thus this will fuel the interest in Thailand as a key emerging market. 

“This is an exciting real estate opportunity for developers in Thailand with potential driven by continued increased local demand and from other more established regional markets,” says Mr. Norville.