Hyperscale data centres on track as Big Techs move in
This translates to around 95MW per year on average although this tapers off slightly to just 58MW annually without the Facebook development.
Over 2015-2018, an average of 35MW of supply was added to the data centre market per annum in Singapore, according to a report by CGS-CIMB. The average supply for 2019-2022F is expected to be about 50MW per year.
CGS-CIMB analyst Lock Mun Yee and Ervin Seow said that they expect over 380MW of new data centre capacity to come onstream over 20192022F, which translates to around 95MW per year on average.
Larger developments in Singapore are sites owned by end-users such as Google and Facebook, whilst the rest appear to be data centres in the colocation space. “The 150MW data centre at Tanjong Kling will be Facebook’s first data centre in the region. Facebook does not have a substantial cloud business like Amazon and Google and so we do not expect its new data centre to displace demand from other colocation providers like Keppel DC REIT,” they said.
Without the Facebook development, average incoming supply would be approximately 58MW per year over 2019-2022F.
Google has historically built and owned its data centres due to a sizeable cash balance on its books.
According to the Cisco Global Cloud Index, data stored in data centres is expected to grow at a
34% compound annual growth rate (CAGR) to reach 1.3 zetabytes by 2021F. Much of this data migration towards data centre storage can be attributed to the rapid adoption of cloud computing services.
This trend is also corroborated by data from Synergy Research showing that hyperscale operator capex has been catching up with telcos, which were traditionally the largest users of data centres. In 2018, the aggregate capex of the top 5 hyperscale spenders, comprising Google, Amazon, Microsoft, Facebook and Apple, was almost identical to the capex of the top 5 telco spenders China Mobile, AT&T, Verizon, NTT and Deutsche Telekom.
“Within the cloud service providers, we note that large scale providers have gained market share over the past four quarters at the expense of small and medium-sized cloud operators, who have collectively lost 5% pts of market share over the same period,” Lock and Seow said.
As the use of public cloud becomes increasingly prevalent, the analysts also expect a shift in data centre demand from the colocation space of individual corporates to the cloud space of cloud service providers.
According to research from Broadgroup Consulting cited by CIMB, demand for data centre facilities is expected to follow global trends and be driven by large hyperscale providers which could potentially take up around 40% of Singapore’s colocation space. “It expects the bulk of the remaining
60% space to be taken up by telcos, multinational organisations, and banking and fintech services companies,” the analysts noted.
“As hyperscale providers increasingly take up greater space, we think that other data centre tenants could face a supply crunch for large space and this also could push rents up,” Lock and Seow said, with CIMB noting that Broadgroup expects new demand to average approximately 50MW per annum in Singapore.
Data stored in data centres is expected to grow at a 34% compound annual growth rate to reach 1.3 zetabytes by 2021.
The 150MW data centre at Tanjong Kling will be Facebook’s first data centre in the region
Data centre supply and demand trends (2015-2022)