Asia Pacific Data Centre Boom to Continue in 2026

Introduction: A Tale of Two Halves

The Asia Pacific data centre market shrugged off a slow start to 2025 to register robust growth over the full year as AI, cloud adoption, and digitalisation continued to provide strong tailwinds, spurring new hyperscale and enterprise demand.

Activity similarly picked up in the investment market in the second half as several major assets changed hands in Japan and Australia and an increasing number of groups targeted Southeast Asia for investment and development opportunities.

CBRE’s Asia Pacific data centre team recently convened to review the past 12 months in the Asia Pacific data centre market and identify the themes, trends and opportunities we expect to be most prominent in 2026. This article summarises these discussions.

Brisk H2 2025 Momentum Set to Continue into 2026

2025 was very much a study in contrasts on the occupier side as a series of surprises in the first half including the launch of DeepSeek’s AI model; U.S tariff hikes and a stock market freefall prompted many hyperscalers to pause Asia Pacific data centre rollout and in some cases even withdraw from leases.

Confidence soon returned to the market however with activity picking up significantly in June and then exceeding all expectations in the second half of the year which saw numerous major data centre rollouts and commitments announced.

While there is much talk of an AI investment bubble, such fears are largely confined to the U.S.. Data centre capacity oversupply is not a concern in Asia Pacific, where land and power availability continue to significantly lag demand.

Forecasts for aggregate hyperscaler capital expenditure in 2026 are north of USD 400 billion globally, with the likes of Google, AWS, Microsoft, Oracle and Meta committing to scaling up AI infrastructure as they look to transform CPU to GPU deployment. Asia Pacific will be a key recipient of this investment.

Robust demand for both colocation and hyperscale data centres will continue to drive strong investor interest in 2026, with the coming year expected to see more large scale investment in secure sites providing 100 MW and above of capacity that are capable of accommodating AI use.

This focus on very large projects will see capital recycling emerge as a key theme as owners and operators dispose of assets – potentially in the form of sale leasebacks – to generate necessary funds. Purchasers in such cases will likely be soft equity in the form of pension and institutional money.

Australia and Japan set to lead demand; Southeast Asia to emerge as investment hotspot

Australia's data centre market is well positioned to build on a strong 2025, which saw extremely aggressive infrastructure buildout by hyperscalers. OpenAI’s recent announcement of a partnership with NEXTDC to build a AUD 7 billion hyperscale AI campus and large-scale GPU supercluster in western Sydney for advanced AI workloads sets the scene for an upbeat year. Investment will be brisk, with a substantial pipeline of stabilised assets in Sydney and Melbourne.

Japan continues to witness rapid growth, with increasing activity by western developers and investors in Osaka prominent in 2025. Access to grid power remains the biggest constraint; a challenge set to intensify in 2026 as data centre workloads shift to more intensive AI-driven demand. 2025 was a big year for investment sales with several stabilised assets changing hands along with some development sites. The coming year will see investors ramp up deal sizes and strategies for both development projects and stabilised assets, with regional cities such as Fukuoka coming into play.

Southeast Asia is poised for further expansion in 2026, with Malaysia gaining traction not only as an offshoot of Singapore but increasingly for local workloads as the government digitises the economy. In Thailand, the government is making it easier to build new data centres by improving access to power and land as well as leveraging recent significant investment in subsea cable infrastructure.

Major global hyperscalers and domestic enterprises made significant investments and operational expansions in India in 2025; a trend set to continue this year, with Hyderabad a focal point. Singapore’s two new tranches of data centre development capacity totalling 1.2 GW should ensure the city-state remains a premium high-quality hub for specialised AI workloads while pushing larger requirements to neighbouring Southeast Asia.

Mainland China will remain a fairly closed market dominated by domestic workloads. While continuing to attract international workloads from hyperscalers, activity in Hong Kong SAR will remain flat as the market continues to absorb capacity. Headwinds will continue to be observed in Korea primarily as a result of community concerns about the impact of data centres on energy supply, forcing a pause to several new developments.

Conclusion: A Positive Year Ahead

A new class of purpose-built cloud provider and data centres for AI and High-Performance Computing (HPC) workloads known as NeoCloud are growing rapidly in Asia Pacific to meet surging demand for GPU-as-a-Service (GPUaaS).

NeoCloud providers considering entering the market are advised to engage experienced third-party consultants to guide them through aspects such as land acquisition; customer introductions; valuations; stakeholder engagement; occupier validation; and cost assessment to ensure their data centre is delivered according to schedule and budget. Once the asset is up and running, lifecycle capabilities and support will be critical.

On the investment front, while land availability, power supply, construction costs and, increasingly, water scarcity, will remain a challenge, the sector's strong fundamentals will provide attractive opportunities for investors looking for direct acquisition, development, joint ventures and platform investments.

With larger asset sizes necessitating capital recycling, seasoned advisors can assist investors to efficiently reuse capital by identifying underperforming or non-core assets that can be sold and reinvesting the proceeds into higher-return opportunities.