{"id":23172,"date":"2025-12-26T14:48:36","date_gmt":"2025-12-26T06:48:36","guid":{"rendered":"https:\/\/sgbuzz.com\/?p=23172"},"modified":"2025-12-26T14:48:36","modified_gmt":"2025-12-26T06:48:36","slug":"data-centre-race-singapore-betting-on-quality-over-scale-say-observers","status":"publish","type":"post","link":"https:\/\/sgbuzz.com\/?p=23172","title":{"rendered":"Data centre race: Singapore betting on quality over scale, say observers"},"content":{"rendered":"<p><br \/>\n<\/p>\n<p>As the AI race heats up, the city-state is pursuing a \u2018sustainable\u2019 data centre strategy \u2013 but what stands in the way of its ambitions?<\/p>\n<div data-testid=\"article-body-container\">\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">[SINGAPORE] As South-east Asia and the world bet on artificial intelligence (AI), data centres have become one of the hottest investments.<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">A <a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.fortunebusinessinsights.com\/data-center-market-109851\" target=\"_blank\" rel=\"noopener\">November report<\/a> from Fortune Business Insights estimated the global data centre market size at about US$243 billion in 2024, with projected growth to reach about US$270 billion in 2025. Much of this growth is expected to be driven by AI. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Meanwhile, data centre investments could hit US$7 trillion by 2030, with more than half dedicated to computing hardware, <a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.mckinsey.com\/industries\/technology-media-and-telecommunications\/our-insights\/the-cost-of-compute-a-7-trillion-dollar-race-to-scale-data-centers\" target=\"_blank\" rel=\"noopener\">according to McKinsey and Company<\/a>. About 60 per cent of that will be spent outside the US. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Singapore is keen to embrace AI and capture its economic benefits.\u00a0In 2023, it unveiled the latest version of its National AI Strategy, which includes the 70-odd data centres in the country that are required for AI-related use. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">The country has also pushed for \u201csustainable\u201d data centres since lifting a <u><a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/companies-markets\/moratorium-on-new-data-centres-to-be-lifted-soon-operators-seek-green-edge\" target=\"_blank\" rel=\"noopener\">three-year moratorium<\/a><\/u> on new data centre projects in 2022.\u00a0<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">This year, the city-state announced plans to build a <a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/esg\/singapore-build-700mw-data-centre-park-jurong-island-pilot-biomethane-imports-tan-see-leng\" target=\"_blank\" rel=\"noopener\">low-carbon data centre park on Jurong Island<\/a> with up to 700 megawatts (MW) of capacity \u2013 its largest such facility to date. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\"><em>The Business Times<\/em> examines where Singapore\u2019s data centre ambitions are headed in 2026, where the country stands in the regional data centre race, and the challenges it faces.<\/p>\n<div data-testid=\"article-inline-youtube-component\">\n<div class=\"paragraph--type-youtube mb-5 paragraph paragraph--type-remove-video paragraph--view-mode-manual \">\n<div class=\"rendered-content-wrapper ratio ratio-16x9\">\n<p><iframe loading=\"lazy\" title=\"Inside Johor&#039;s explosive data center growth: A threat to Singapore?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/uZk0Dz7Tn0I?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/div>\n<h2 class=\"-tracking-5% mb-4 md:mb-6\" data-testid=\"heading-component\">What Singapore wants <\/h2>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">The Republic\u2019s data centre strategy is carefully designed, say industry players and analysts. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Xavier Lee, equity analyst at Morningstar, notes that Singapore has demonstrated a \u201cmeasured\u201d yet \u201cambitious\u201d push for quality over quantity. He cites the 20-hectare Jurong Island data centre park, which will increase Singapore\u2019s data centre capacity by 50 per cent from 2024 levels, as an example. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Meanwhile, Keppel\u2019s chief digital officer Manjot Singh Mann believes that Singapore has the potential to become a \u201cvery significant\u201d digital hub to run the most critical and expensive AI applications. The country\u2019s strengths in policy, execution and connectivity can be applied beyond AI training to more intelligent workloads, such as those deployed in banking or manufacturing, he notes.<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">\u201cTraining loads require much higher (data centre) capacity and much larger pieces of land,\u201d says Mann. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">On the other hand, intelligent workloads need to be closer, monitored and more secure. \u201cThose workloads require a hub, and that hub is Singapore,\u201d he adds. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Lee echoes this view, pointing to Singapore\u2019s unique position of not having to directly compete with other Asean nations for data centres. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">\u201cInvestors should view the region as a single, symbiotic ecosystem. Singapore serves as the brain for latency-sensitive, high-value workloads, while Johor and Batam provide the industrial scale for heavy AI model training,\u201d he says. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Mann also notes Singapore\u2019s desire to remain as the primary hub for subsea cables carrying data centre traffic through the region, which will help it remain a vital connectivity node between East and West. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Providing low-latency data connections for high-volume trading will boost Singapore\u2019s financial sector, which accounted for about 14 per cent of its 2024 gross domestic product. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">The data centre sector alone added S$2 billion annually to Singapore\u2019s economy, according to a <a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/accesspartnership.com\/wp-content\/uploads\/2023\/03\/green-data-centres-policy-singapore-case.pdf\" target=\"_blank\" rel=\"noopener\">2023 Amazon Web Services (AWS) study<\/a>. This was nearly half the size of the entire retail sector and larger than the hospitality sector. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Data centres also created several thousand high-paying and high-productivity jobs, per the study, with wages for such roles 35 per cent above the national average and labour productivity 2.6 times higher.<\/p>\n<h2 class=\"-tracking-5% mb-4 md:mb-6\" data-testid=\"heading-component\">Land is the limit <\/h2>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">In the second quarter of this year, Singapore ranked eighth in Asia in terms of total data centre capacity, according to Cushman &amp; Wakefield. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">China was the runaway leader, while the city-state\u2019s northern neighbour, Malaysia, still dwarfed Singapore\u2019s capacity. Looking ahead, experts believe the city-state will remain capacity-constrained compared with its Asean neighbours despite the 700 MW Jurong Island expansion announced in October. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Beyond land scarcity, the country also faces power and water consumption limitations.<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Another \u201cmajor constraint\u201d is the requirement for green power, says Morningstar\u2019s Lee. He notes that Singapore\u2019s sustainable growth plans call for strict energy efficiency and low-carbon sourcing, which narrows the options for data centre construction and operation.<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">However, Keppel\u2019s Mann believes that the Jurong Island green data centre park will largely resolve the issue. The company plans to begin construction on the world\u2019s first <u><a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/events-awards\/sustainability-impact-awards\/Keppel-eyes-alpha-returns-in-riding-sustainability-megatrend\" target=\"_blank\" rel=\"noopener\">large-scale floating data centre<\/a><\/u> at the Loyang Offshore Supply Base in 2026, with completion targeted for 2028, which could help relieve land and cooling constraints. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Still, land limitations are far from a death-knell for the future of data centres in the country. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Turner &amp; Townsend director Alex Quek believes that Singapore will be a significant player in the data centre race, albeit in the context of sustainability rather than pure capacity. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">He says the push for sustainable data centres will position Singapore as the region\u2019s top \u201cdigital demand command centre\u201d for AI and green energy by 2030. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">On the geopolitical front, Singapore\u2019s stability is a key advantage that sets it apart from its regional peers, says OCBC Investment Research\u2019s head of research Carmen Lee.<\/p>\n<h2 class=\"-tracking-5% mb-4 md:mb-6\" data-testid=\"heading-component\">Limited power <\/h2>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Another key constraint Singapore\u2019s data centres face is electricity supply, says OCBC\u2019s Lee. The city-state has already begun efforts to \u201cfuture-proof\u201d its power grid, with consistent power delivery to data centres being\u00a0 a \u201cfar greater consideration\u201d than issues such as land limitations. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Keppel\u2019s Mann and OCBC\u2019s Lee note that Singapore\u2019s land scarcity and Green Plan have driven simultaneous innovations and efficiencies in power, water and land. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Such a sustainability push could also unlock a 2.8-fold job growth and an 8.9-fold economic boost in a \u201cgreen growth\u201d scenario, according to the 2023 AWS study. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">While OCBC\u2019s Lee says it is unlikely that data centres will exhibit double-digit demand and investment growth from 2026, they could still show \u201chigh single-digit\u201d growth of about 7 to 9 per cent, both organically and due to regional trade. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Meanwhile, Quek says a significant part of Singapore\u2019s data centre future likely involves retrofitting \u201caged\u201d data centres to meet AI sector demand \u2013 particularly in terms of reliability. This, he says, could help drive data centre construction demand from 2026 onwards. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">However, with <u><a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/international\/asean\/will-ai-bubble-pop-2026-why-south-east-asia-wont-shake-if-it-does\" target=\"_blank\" rel=\"noopener\">fears of an AI bubble<\/a><\/u> intensifying, it is unclear whether AI-linked data centre demand will last and how badly the sector would be hit if the bubble pops. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">OCBC\u2019s Lee says that while there has been an \u201cover-investment\u201d in AI, the third-quarter earnings of AI-focused tech companies such as <a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/companies-markets\/telcos-media-tech\/nvidia-beats-q3-revenue-estimates-helping-counter-fears-ai-bubble\" target=\"_blank\" rel=\"noopener\">Nvidia<\/a> and <a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/companies-markets\/telcos-media-tech\/meta-forecasts-bigger-capital-costs-next-year-us16-billion-tax-charge-guts-q3-profit\" target=\"_blank\" rel=\"noopener\">Meta<\/a> had \u201csomehow\u201d been strong enough to allay fears. Had earnings not followed investment, then there would have been cause for alarm, she notes. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Should an AI market bubble burst, the fallout would be seismic, with the dampening effect on data centre demand likely felt through 2029. As Lee observes, most companies involved in the data centre space have commitments in 2026, and the \u201cinvestment cannot stop immediately\u201d.<\/p>\n<p> <iframe loading=\"lazy\" id=\"omny-podcast-7c6e6bee-34bd-4bd7-9457-8214d8de5d4d\" src=\"https:\/\/omny.fm\/shows\/money-hacks-1\/data-centres-aren-t-sexy-but-essential-and-increasingly-lucrative\/embed\" width=\"100%\" height=\"180\" class=\"mx-auto max-w-full mb-4 md:mb-6\" data-testid=\"article-inline-podcast-component\" title=\"Podcast\"><\/iframe> <\/p>\n<h2 class=\"-tracking-5% mb-4 md:mb-6\" data-testid=\"heading-component\">South-east Asia\u2019s data centre outlook <\/h2>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">With Singapore facings constraints, the race among its Asean neighbours to absorb the spillover demand for data centres is heating up. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">While Malaysia is a <a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/international\/global\/whos-pulling-ahead-south-east-asias-data-centre-race\" target=\"_blank\" rel=\"noopener\">frontrunner in the region<\/a>, operators are also looking elsewhere amid its own resource constraints and increased regulatory oversight, said a BMI report in November.\u00a0<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">\u201cMalaysia remains an attractive destination for data centre investment, but tighter controls in power allocation and approvals mean that projects may take longer to get up and running,\u201d says Muhd Syafiq, JLL\u2019s data centre research director for Asia-Pacific.\u00a0<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">This comes as electricity tariff hikes threaten to increase<strong> <\/strong><a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/international\/asean\/malaysias-data-centre-boom-looks-poised-continue-despite-power-labour-concerns\" target=\"_blank\" rel=\"noopener\">operators\u2019 power costs<\/a> and <a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/startups-tech\/johor-rejects-nearly-one-third-14-data-centre-applications-jan-may-protect-water-power-resources\" target=\"_blank\" rel=\"noopener\">permit processes<\/a> for data centre projects seeking approval are tightened.<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">BMI technology analyst Alex Kheder says: \u201cRising land acquisition costs and emerging signs of saturation, particularly in Johor, threaten the long-term sustainability of (Malaysia\u2019s) leadership.\u201d\u00a0<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">As operators seek lower-cost alternatives, Thailand \u2013 with a surplus of energy resources \u2013 is absorbing some of the spillover demand, says Delta Electronics (Thailand) chief executive officer Victor Cheng.\u00a0<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Thailand\u2019s data centre market remains in the nascent stages of operational maturity, but its <u><a class=\"text-verticals-btblue underline\" data-testid=\"article-annotation-link-component\" href=\"https:\/\/www.businesstimes.com.sg\/companies-markets\/thailands-data-centre-rush-starting-malaysia-strains-keep-pace-surging-demand-macquarie\" target=\"_blank\" rel=\"noopener\">Eastern Economic Corridor has clinched investments from tech giants<\/a><\/u> such as Google and Amazon. \u00a0<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Vietnam has also grown more aggressive in courting data centre buildout, Cheng observes.\u00a0<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Over the next five years, he sees Vietnam\u2019s data centre growth potentially surpassing that of Indonesia, whose market is constrained by grid and transmission challenges. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Similarly, Kheder notes that Vietnam appears set to become an increasingly competitive regional player beyond 2026, with its data centre scene rapidly catching up amid comprehensive regulatory reforms, improving infrastructure and data sovereignty mandates. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">Still, Malaysia\u2019s ability to serve both its own and Singapore\u2019s market efficiently remains a \u201ccore advantage\u201d in the short-to-medium term, he says.<\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">\u201cContinued dominance will depend on Malaysia\u2019s capacity to address infrastructure constraints and maintain cost competitiveness amid intensifying regional competition,\u201d he adds. <\/p>\n<p class=\"whitespace-pre-wrap break-words mb-4 md:mb-6\" data-testid=\"article-paragraph-component\">That edge can be maintained if it focuses on core areas such as smart power allocation, stronger connectivity and streamlined processes, says Syafiq. \u00a0<\/p>\n<div data-testid=\"article-btg-newsletter-component\" class=\"border-t border-gray-175 py-3\">\n<div>\n<p class=\"font-lucida text-xl font-medium italic leading-normal -tracking-5% text-gray-850\">Decoding Asia newsletter: your guide to navigating Asia in a new global order. <span class=\"inline 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Free.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.businesstimes.com.sg\/startups-tech\/technology\/data-centre-race-singapore-betting-quality-over-scale-say-observers\" target=\"_blank\" rel=\"noopener\">Read Full Article At Source <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the AI race heats up, the city-state is pursuing a \u2018sustainable\u2019 data centre strategy \u2013 but what stands in the way of its ambitions?&#8230;<\/p>\n","protected":false},"author":1,"featured_media":1864,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[2611],"tags":[],"class_list":["post-23172","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buzz-headlines","wpcat-2611-id"],"_links":{"self":[{"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/posts\/23172","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23172"}],"version-history":[{"count":0,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=\/wp\/v2\/posts\/23172\/revisions"}],"wp:attachment":[{"href":"https:\/\/sgbuzz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23172"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23172"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sgbuzz.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}