APAC to overtake North America as largest colocation region by 2022

APAC region colocation
Server racks in server room cloud data center. Image by Kwarkot | Bigstockphoto

COVID-19 became the turning point for colocation services, cloud service providers, and video conferencing server companies. For co-location vendors, in particular, Asia Pacific (APAC) has become an extremely attractive market, with vendors NTT and Equinix taking the lead.

A recent report by Synergy Research Group (SRG) highlights that APAC, despite being labelled a fragmented market for data centre co-location services, will overtake North America by 2022 as high co-location growth rates persist in the region.

Data centres have seen a major boom in the last year as internet users, gaming, digitalization, and e-commerce investments grew to record-highs. Rapid population booms in countries such as India and Indonesia fuel the need for increased data storage capacities.

Reportlinker notes that upcoming 5G installations in various APAC countries will further drive higher demand for data centre power. Co-location providers currently dominate this market, with investments expected to reach USD 2,533 million by 2026.

Following the lead of NTT and Equinix are three China-based vendors, namely China Telecom, GDS, and 21 Vianet, all focused almost only on their home market. SRG also reports the growth of well-established co-location vendors present in two or more country markets: KDDI Telehouse, STT GDC, Keppel, and Global Switch.

Country-wise, the biggest co-location markets are China, Hong Kong, and Japan, accounting for a little below 60% of total colocation revenues. Singapore, Australia, India, and South Korea are also moving up the list because of their colocation market sizes and fast growth rates.

Meanwhile, the cities with the most data centres are Beijing, Shanghai, Shenzhen, Guangzhou, and Hong Kong.

“APAC is a really interesting market. While at first glance the region might appear to share some characteristics with the European market, it is actually very different, The fact remains that it is a high-growth region and the amount of focus it is getting from hyperscale operators will help to drive future growth, especially on the wholesale side of the co-location market,” said John Dinsdale, a chief analyst at Synergy Research Group.

Other factors behind APAC’s growth as a co-location hub include the adoption of increased renewable energy sources among vendors, further growth in edge data centre demand, and an increase in lithium-ion batteries procurement.

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