Indonesia's Data Centre Industry: Unveiling Growth Opportunities
Explore the appeal of data centres as a new hotspot amid AI boom and cloud adoption in Indonesia
2 minutes to read
The Wealth Report forecasts a surge in demand for data centre spaces by 2025, particularly from technology and information companies. These centres are anticipated to cluster around industrial estates adjacent to campuses or technology hubs, aligning closely with the research and development of artificial intelligence.
In 2023, the Greater Jakarta area witnessed a notable dominance in data centre space demand, accounting for a significant 33% of market uptake. This trend has persisted over the past three years, indicating a sustained preference for data infrastructure within industrial estates across the region.
According to the Asia-Pacific Data Centres 2023 report, the widespread emergence of AI this year has sent shock-waves through the global data centre market, with record absorption rates and ramp-up quantums being reported in the US, with Europe and Asia expected to follow shortly. Early indications are that markets such as Johor, Mumbai, and Jakarta will benefit from the proliferation of AI due to the cheaper cost of land and power. Operators, however, will need to proactively co-ordinate their approaches in lobbying governments for increased power production, with gigawatt power generation and distribution required across all key data centre markets to capture this demand.
Cloud adoption continues to surge throughout the Asia-Pacific region, propelling demand for data centre services. Tier-II markets, backed by government support, regulatory changes, and tax incentives, are seeing multiple new cloud regions being created, with data centre operators fighting to capitalise on the radical supply-demand imbalances that exist in these markets. Robust take-up continues to be witnessed across most Tier-I markets, as enterprises remain committed to hosting their computing virtually on either Chinese or US cloud platforms.
Despite Indonesia's current low data usage rate, which remains under 1 watt per capita compared to 10-100 watts per capita in other parts of Asia, the country exhibits substantial growth potential. This is evidenced by the robust uptake of data centre spaces in the Greater Jakarta area, positioning it as one of the most active occupiers in recent years.
The Wealth Report also underscores the enduring appeal of the industrial and retail sectors for investment, as indicated by attitude surveys. Notably, the expansion of new industrial estates has seen steady growth of approximately 2% over the past three years, defying economic challenges posed by the pandemic.
This potential investment landscape hasn't gone unnoticed by affluent individuals, colloquially referred to as the "crazy rich," who closely monitor promising sectors such as real estate. According to the Wealth Report, the population of ultra-high-net-worth individuals (UHNWIs) and high-net-worth individuals (HNWIs) in Indonesia is set to outpace global growth rates, rising from 28% to 34% over the next five years. This suggests a burgeoning interest in property investment among Indonesia's wealthy elite.
For more insights on our latest edition of The Wealth Report, please click here: https://www.knightfrank.com/wealthreport.