The Philippines is part of an emerging group of ASEAN markets that are experiencing increased investment and development activity from data centre providers in anticipation of the upcoming wave of decentralisation in Internet infrastructure. Longstanding first tier data centre markets such as Singapore and Hong Kong are experiencing various challenges and constraints, coupled with the increased focus on data sovereignty regulations, and the desire for better performance, have led to other ASEAN markets such as the Philippines becoming prime destinations for both hyperscale and enterprise deployments.
The underlying demographics are strong. The Philippines has seen steady growth in Internet penetration and accelerating demand for digital services, leading to higher data consumption, especially with the rise of online gaming, streaming and enterprise adoption of cloud-based applications. There is also an evolving need for reliable infrastructure to support the next wave of Internet applications that include generative artificial intelligence (GenAI), machine learning and analytics. The Philippines is a popular IT outsourcing destination and this drives demand for data centres to support the IT infrastructure needed for business operations.
The surge in investment and development activity is likely to create challenges related to power availability, consistent connectivity, and suitable locations for data centre clusters to grow and scale. The market is becoming increasingly competitive as both local and international players are positioning themselves strategically not only with sites under development and operational, but also securing additional land banks as a way of future-proofing their customer’s ability to scale in the medium- to long-term.
While the Philippines has consistently flown under the radar up until just the last few years, this is rapidly changing due to the push to bring in-country public cloud infrastructure to the Philippines. Alibaba Cloud was the first to land and Tencent Cloud has followed suit, while AWS has brought online its Local Zones nodes that perhaps will translate over time into core regions. And other hyperscale cloud platforms are expected to enter the market. Again following the pattern seen in other emerging markets, the entry of hyperscale clouds has ignited demand for data centre colocation and self-building is less an option here given the lack of scale and the relative unfamiliarity with the market creating operational and logistic challenges that need to be addressed. Time-to-market is also a strong consideration slating hyperscalers to lease rather than build.
The Philippines data centre colocation market, centred primarily around Manila, is in an early stage of development and is projected to be worth US$219m in 2023. The sector is projected to grow steadily at a five-year CAGR of 36% through 2028. The Philippines is tracking to becoming a hyperscale market sooner than later. Hyperscale colocation revenue is expected to grow at a 61% five-year CAGR, significantly outpacing enterprise colocation demand at an 11% five-year CAGR.
This report is an excellent resource for any service provider, investor or enterprise end user looking to understand and project the data centre market in the Philippines or find a service provider. The methodology applied continues to be the most robust in the industry. Supply is tracked on a rack and power basis, while all metrics are split along retail and hyperscale lines, and inventory is aggregate into multiple tiers according to build status, absorption rates and maximum capacity levels. Hyperscale cloud nodes and on-ramps are mapped and a complete directory is provided.