Data center providers continue to expand in emerging markets | Knowledge of the data center

Cloud solution providers (CSPs) and co-location data center companies are actively searching for mature emerging markets with large numbers of users and a lack of data center capacity.

“There is no doubt that this has been and continues to be an accelerating trend,” said Alan Howard, an analyst at Omdia. “India is a good example of a rapidly maturing market, so what we’re seeing is global companies entering the market to seize that opportunity.”

India’s Ministry of Information Technology plans to introduce incentives of up to nearly $2 million under the national data center policy framework, and some local Indian state governments – including Maharashtra, Telangana, Karnataka and Uttar Pradesh – are offering special incentives including land subsidies and other concessions to boost investments Data centers, according to ICRA. In May, the rating agency ICRA announced that the Indian data center industry is expected to see a surge Five times the increase in capacity in the next five years.

India is one of the fastest growing data center markets in Asia and the size of the Asia Pacific data center market is expected to be twice that of North America by 2025.

China is another hot market, according to Vladimir Galapov, Head of Cloud Research and Data Center Practices at Umedia.

He said the largest data center projects are expected to be completed this year and the first half of next year in the Beijing region.

“The other big expansion area is still Shanghai and the Yangtze River Delta,” he added.

He expects to see smaller cities around larger metropolitan areas to take advantage of new trends in data center location selection.

“Proximity to the metropolitan area allows for low-latency connectivity for businesses located in the city, while real estate prices result in better revenue for the data center operator,” he said.

The main reason data center providers are expanding outside of their major traditional markets is to meet the current demand in areas with limited real estate.

For example, data center projects in Malaysia and Indonesia are expected to accelerate due to land restrictions in Singapore and Hong Kong, where several submarine cables are landing.

The same is true for Europe.

“We expect the capacity of cloud data centers and data in Italy, Poland and Slovakia to grow several times in 2022 and 2023, as ultra-wide-scale cloud providers build massive data centers,” he said. “The three new EU hotspots will become a net exporter of cloud services to Germany, France and other EU countries.”

So it’s no surprise that major global data center companies are eyeing these areas.

However, the opportunities in emerging markets do not come without challenges.

For example, the war in Ukraine has had repercussions for Western companies operating in Russia and Belarus. But the geopolitical fallout has created a divide elsewhere around the world, raising the stakes.

Fortunately, data center companies were aware of these particular risks and did not make any major investments in Russia or Belarus.

According to Omdia’s data center building tracker, among the 38 largest cloud and co-location providers, no one owns and operates data centers in Russia, Belarus, or Ukraine.

In fact, many countries that are usually great data center locations are often overlooked by builders of huge data centers, due to the potential for geopolitical risks.

Other service providers use local partners or acquire existing companies.

Last month, Digital Realty Completed $3.5 billion acquisition of Teraco In South Africa.

And last spring, Equinix completed $320 million Acquisition of West African data center provider MainOne. This announcement was quickly followed by a $735 million acquisition of Five data centers in Chile and Peru.

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