2026 Data Center Trend Forecast Series – Part 2 of 4
The Asia-Pacific region is currently experiencing an unprecedented digital infrastructure transformation. This region is estimated to contribute approximately 30% of global capacity expansion over the next five years, with total investment reaching over $564 billion by 2028. This massive capital injection is transforming various aspects, from cloud computing to artificial intelligence (AI) deployment. While legacy hubs like Singapore and Tokyo face power constraints and land scarcity, a new class of emerging markets is starting to stand out—creating opportunities that were unavailable just a few months ago.
Reasons for the Current Acceleration of APAC Data Center Expansion
Several converging forces are making 2026 a turning point for digital infrastructure across the region.
Artificial Intelligence and High-Density Computing
The generative artificial intelligence revolution continues. Modern AI workloads require specialized high-density racks and advanced cooling systems. The industry notes an increase in average server rack power density, with wider adoption in the 10 kW to 30 kW range; however, facilities exceeding 30 kW are still relatively few, and facilities with very high density are still rarely encountered, as noted in the Uptime Institute’s 2025 Global Data Center Survey. This density increase creates urgent demand for new AI-ready facilities.
Data Sovereignty Rules
Governments across Southeast Asia are enforcing stricter data residency requirements. Vietnam, Thailand, and Indonesia have introduced regulations requiring financial and personal data to remain within national borders. This compliance-driven surge requires companies to no longer route all processes through a single hub like Singapore—they must build local facilities in various jurisdictions simultaneously.
Massive Capital Inflow
Various capital owners (retail, private, and state) have assessed data centers as valuable portfolio assets. The market has provided unprecedented capital, enabling rapid development. The overall Asia-Pacific data center market is projected to grow at a Compound Annual Growth Rate (CAGR) of 12.40% from 2025 to 2035, driven by these billion-dollar joint ventures.
The Power Paradox: Challenges and Opportunities
Discussions surrounding APAC data center expansion always return to the issue of power—but the narrative has shifted from “cheap power” to “available and sustainable power.”
Goldman Sachs estimates that global power demand from data centers will increase by 50% by 2027 and is projected to rise up to 165% by 2030 compared to 2023 levels. In established markets, this condition creates power grid bottlenecks. Singapore’s recent moratorium (now lifted with strict sustainability requirements) forced operators to seek alternative locations. Tokyo faces similar constraints, where some developers must wait 3-5 years for power grid connections.
Asia is home to 83% of the world’s coal-fired power plants, yet clean energy investment has now significantly surpassed fossil fuel investment in the region. The total combined share of renewable energy in Asia reached 29% in 2024. Hyperscalers demand Power Purchase Agreements that encompass renewable energy. And providers who can supply pure green power command a price premium—even in markets where coal still dominates the grid mix.
Read more: Driving the Future: Integrating Renewable Energy into Data Centers
Projections for 2026: Key Trends Defining the Market
Liquid Cooling Targeting High Density
Although air cooling remains the baseline standard for most facilities, the need to support extreme density AI clusters (generally over 30 kW per rack) is driving the adoption of immersive and direct-to-chip cooling as baseline specifications for newly built facilities. This reflects emerging hardware demands in the market.
Modular and Phased Development
Instead of immediately establishing 100MW mega campuses, operators are building in phases of 10-20MW that can be operational within 12-18 months. This approach aligns with customer demand, providing flexibility in expansion. This approach dominates in emerging markets like Indonesia, where demand is strong but gradual.
Read more: The Future of Data Center Indonesia: Infrastructure and Investment on the Rise
Interconnection Ecosystems
The role of data centers in APAC is shifting from the traditional leased space model to interconnection hubs. The presence of carrier-neutral facilities with rich ecosystems (including the financial services industry, enterprises, ISPs, etc.) creates network effects that underpin premium pricing. This model becomes a valuable asset, especially in regions where international bandwidth capacity is skyrocketing, but local exchange infrastructure is still relatively minimal.
The APAC Landscape in 2026: A Service Provider Perspective
For companies planning 2026 deployments, strategic considerations are becoming complex. Hyperscalers are launching new availability zones across APAC on an unprecedented scale, but site selection now involves evaluating dozens of variables beyond just connectivity.
Power availability is the top priority—is 50 MW capacity available now with potential scalability up to 200 MW? Renewable energy supply becomes the next crucial consideration, given that many RFPs now require 100% green energy from the start of operations. Other important factors include fiber optic diversity, earthquake risk, flood-prone areas, and local regulatory stability.
This is where regional specialists add value. Companies like Digital Edge, with operations hubs in APAC, possess what global operators struggle to offer: an understanding of regional standards and local expertise. Especially regarding bureaucracy, land, and power capable of supporting hyperscale performance or larger. Regional operator facilities have been optimized for tropical climates; and distributed layouts to reduce environmental/natural disaster risks while remaining close to best connectivity routes.
This advantage is not just operational—but also temporal. In markets where securing land and power can take 18-24 months, working with a provider who has completed the groundwork can accelerate deployment by a year or more.
Future Outlook: The 2026 Inflection Point
The APAC data center narrative is not just about capacity—but about capability. By 2026, this region will transition from follower to leader in defining next-generation data center architecture. Markets across Southeast Asia are leapfrogging legacy constraints to deliver AI-ready, sustainably powered, and hyper-connected infrastructure.
For companies planning their 2026 digital strategies, the message is clear: the emerging APAC market is no longer a secondary option, but a primary deployment destination. The question is no longer whether to build a presence, but how quickly capacity can be secured before this fast-growing market tightens. The expansion isn’t coming—it is already happening.
