Data Centers: The Philippines on the radar for investments

The data center market in the Philippines has seen more movement over the last six months than the last two years, making it one of the fastest-growing real estate sector in the Philippines. 

The reasons are not difficult to perceive. We create 1.7 MB (or roughly the size of a photo taken from your mobile phone) every second. All of that data is stored in a data center somewhere in the world. 

COVID-19 has only accelerated our reliance on data centers. With more video calls and hybrid work happening around the world, we are seeing greater dependence on technology. The demand for co-location, internet, and cloud services required the need for sophisticated facilities based in-country. 

It is no surprise therefore that the global data center market is estimated to grow at an average of more than 13% ever year to USD 143.4 billion by 2027, according to Research and Markets. By 2023, Asia Pacific is predicted to account for 30% of global center revenues. Excitingly, the Philippines is near the epicenter of this wave of developments happening across the region. 

The country has been on the radar for data center operators primarily for the local population’s high digital consumption. The number of internet and social media users in the Philippines rose by 6.1% and 22% respectively between 2020 and 2021, according to Hootsuite. 

This is supported by a wide array of characteristics that make investing ideal in the country, such as government support, growing renewable energy sector, and availability of engineering and IT talent. Infrastructure development has also been an appeal; the Philippines’ infrastructure spending will average about 5.4% of GDP between 2022 and 2024, a considerable investment in accessibility. Lastly, the country offers an important factor that some established hubs cannot: available raw land. Indeed, this has been the primary constraint of data center sector expansion in areas such as Singapore. 

What can we expect over the medium term? While the country currently has a total IT supply capacity of 94 MW, Santos Knight Frank has recorded approximately 125 MW of additional planned capacity from operators who expressed interest to build in the medium term.  

Already, first-mover YCO Cloud Centers has announced the construction of a 12-MW Data Center in Malvar, Batangas. This phased development plan begins with the construction of the site, a 10,000-sqm two-story Data Center, including the first of four 3-MW data halls. 

The data center market is an exciting space for the Philippines. As the Data Center sector continues to grow alongside the increasing demand for data, we expect to see an upswing in activity for data center investments into the country.