Structure Research data points in Singapore data centre market

• January 15, 2016

Source: The Business Times Singapore

Cushman & Wakefield research director Christine Li coined the increased supply situation as “an ideal scenario” for tenants seeking better quality DCs or migrating from ageing facilities to take advantage of competitive rents that now average S$30 to S$45 per square foot per month.

She said: “We believe that once the supply is fully absorbed, pricing might even start to trend up as early as the beginning of 2018.”

The average DC occupancy rate islandwide now hovers at around 70 per cent, and may dip further. But Ms Li commented that this should not raise an alarm, given that demand in the medium term will be sustained.

Underscoring that demand has been the increased compliance requirements on data security from the finance industry, along with the exponential growth in data storage and management in a digital economy.

Annual absorption by square footage from 2008 to 2015 has been growing at a compounded annual rate of 28 per cent, said Cushman & Wakefield.

“We expect the occupancy to be back at 70 per cent by 2018, and it will soon turn into a ‘landlord’s market’ with positive rental reversions once the supply is fully taken up over the next two years,” Ms Li said.

Structure Research, which focuses on Internet infrastructure research, found that Singapore’s co-location market size is likely to grow from US$963.2 million in 2014 to US$1.27 billion this year.

Owing to its favourable attributes as a host country for DCs, Singapore has the largest data-centre market in the Asia-Pacific.

It started from three main operators Equinix, Global Switch and Singtel in the late 90s, and was followed by the next wave of DC providers such as DRT, the Keppel group and 1-Net, a MediaCorp enterprise. Since 2011, Singtel, Tata, NTT, Keppel, Pacnet, iO and Century Link have garnered more market share.

More recently, the government has sought to entrench Singapore’s position as an infocomm and media hub; the Infocomm Development Authority of Singapore, Singapore Economic Development Board and Jurong Town Corporation (JTC) teamed up to develop a Data Centre Park (DCP) in Jurong to draw multinational corporations here to set up premium DC operations.