Asia-Pacific's data centre development pipeline has surged to a record 19.4 gigawatts, with hyperscale and artificial intelligence demand transforming the sector into one of the region's most dynamic real estate asset classes, according to new research from Cushman & Wakefield.
Unprecedented Scale of Development
The region had 3.7 gigawatts under active construction and a further 15.7 gigawatts in various stages of planning at the end of 2025, the global consultancy said in its latest market update. Southeast Asia accounted for 31 percent of active builds, with strong hyperscale activity in Malaysia, Thailand, and Indonesia anchoring growth and positioning the subregion for a major delivery cycle throughout 2026.
Operational capacity across Asia-Pacific rose to 13.8 gigawatts during 2025, with Malaysia and India together accounting for 58 percent of all new supply delivered during the year. The rapid expansion reflects the growing appetite of global technology companies for AI-ready facilities closer to their end users across the region's fast-growing digital economies.
"Asia Pacific's data centre market is in delivery mode," said Andrew Green, head of Cushman & Wakefield's APAC data centre group. "We're seeing AI-ready capacity delivered at unprecedented scale across the region. Markets like Johor, Mumbai and Bangkok are now central to deployment strategies."
Malaysia's Johor Emerges as Regional Powerhouse
Perhaps the most striking development in the regional data centre landscape is the meteoric rise of Johor in southern Malaysia. The state more than doubled its live capacity to 897 megawatts during 2025 and is now backed by one of the deepest development pipelines in the entire Asia-Pacific region.
Johor's appeal to hyperscale operators stems from its strategic proximity to Singapore, competitive land and power costs, and supportive government policies. In Cushman & Wakefield's data centre maturity index, Johor now ranks as the region's top market by combined scale and growth potential, surpassing traditional powerhouses like Tokyo and Beijing.
The implications for real estate investors are significant. Land values in Johor's data centre corridors have appreciated substantially, while ancillary demand for worker housing, logistics facilities, and commercial space is creating secondary investment opportunities across the state.
India's Rapid Ascent Continues
India has now overtaken Japan to become Asia-Pacific's second-largest data centre market by operational capacity, reaching 1.5 gigawatts. Mumbai posted a 42 percent increase in live supply to 768 megawatts during 2025 and continues to lead the country's future pipeline development.
The Indian market's growth trajectory is supported by the country's massive digital population, expanding cloud adoption across enterprises, and government initiatives to promote data localisation. Chennai, Hyderabad, and Pune are also emerging as important secondary hubs as operators diversify beyond Mumbai's established corridors.
Tightening Vacancy Despite Supply Surge
Despite the unprecedented volume of new capacity coming online, vacancy rates across the region actually tightened during the period. Regional vacancy fell to 10.9 percent in the second half of 2025 from 12.4 percent a year earlier, underscoring the extraordinary absorption driven by cloud migration, AI model training, and enterprise digital transformation initiatives.
This supply-demand dynamic has significant implications for rental growth and investment returns. Markets that can deliver power-dense, AI-ready capacity quickly are commanding premium rents, while older facilities face growing pressure to upgrade or risk obsolescence.
Institutional Capital Flows Accelerating
Capital market activity in the data centre sector remained robust throughout 2025, with institutional investors increasingly treating digital infrastructure as a core allocation within their real estate portfolios. One of the year's marquee transactions was Keppel DC REIT's JPY 82.1 billion (US$551 million) acquisition of a hyperscale facility in Greater Tokyo, leased to Microsoft on a long-term contract.
However, Cushman & Wakefield noted that funding strategies have become more disciplined, with investors focusing on assets with strong demand visibility, creditworthy tenants, and proven power infrastructure rather than speculative developments.
Meanwhile, Melbourne has moved into the consultancy's "powerhouse" category of leading hubs, while Osaka has advanced into the established tier, reflecting a broadening of development activity beyond traditional core markets and creating new opportunities for investors seeking exposure to the sector.
For real estate professionals across Asia-Pacific, the data centre boom represents both a transformative opportunity and a challenge. Traditional property metrics are being supplemented by technical specifications like power density and connectivity, requiring new expertise and evaluation frameworks as the sector matures.
