PETALING JAYA: The booming data centre segment is set to have a positive impact and create opportunities for players within the local real estate market, experts say.
Zerin Properties chief executive officer Previn Singhe noted that the data centre market in Malaysia is poised for significant growth in 2025.
This is driven by increasing digitalisation, cloud adoption and the government’s focus on developing digital infrastructure through initiatives like MyDigital and the National Digital Network Plan.
Among the benefits to the local property market is the potential to boost demand for industrial land and facilities, he said.
“The surge in data centre investments has increased demand for industrial and semi-industrial land, particularly in strategically located regions like Johor, Selangor and Penang.
“This demand boosts land value and attracts foreign direct investment, creating a ripple effect across the local property market,” he told StarBiz.
Additionally, Previn said the thriving data centre segment is set to spur infrastructure development.
“To support data centres, developers are upgrading power and connectivity infrastructure. This improves the overall attractiveness of surrounding areas for other real estate developments, including residential and commercial properties.
“Data centres also offer a lucrative diversification opportunity for real estate investment trusts and institutional investors, adding a high-yielding asset class to their portfolios,” he said.
Moreover, Previn anticipates good job creation prospects for property players.
“Construction and operational phases of data centres contribute to employment, fostering growth in ancillary services such as logistics, security and facility management, which support demand in the residential rental market,” he said.
According to Knight Frank, Malaysia secured RM141.72bil in digital investments in the first 10 months of 2024 – triple 2023’s total.
“The country hosts 54 operational data centres with a 504.8MW capacity, with Johor leading in information technology capacity and the Klang Valley remaining a core market.
“Emerging hubs include Sarawak, Negri Sembilan and Kedah,” it said in a recent statement.
Commenting on Johor’s opportunistic position amid the current data centre gold rush, Olive Property Consultants chief executive officer Samuel Tan said he expects more investments down south, going forward.
“The ecosystem is already established. Johor’s proximity to Singapore is a major attraction factor. Policies are clear and these are desirable to the operators.”
In spite of the bullish outlook, Tan cautioned that the situation is not without challenges.
“The challenges will be the sufficiency of power and water. These can be overcome but it will take time and cost.
“It was reported recently that the Johor State Government had rejected some 30% of the applications received. This is a prudent move.”
Previn concurred that the high energy and water requirements of data centres pose sustainability concerns, especially with Malaysia’s carbon neutrality goals.
“Developers and operators need to integrate renewable energy solutions and energy-efficient technologies to mitigate this impact.
“Furthermore, the government must address regulatory clarity and streamline approval processes to remain competitive with regional peers in South-East Asia.”
Tan opined that the state (Johor) should be selective and move beyond data centres.
“The next wave should be on semiconductor and artificial intelligence- related technology, as well as the advanced electrical and electronics sector.
“These involve higher transfer of technology, more job opportunities and larger multiplier effects to the micro, small and medium enterprises.”
Previn meanwhile noted that Malaysia’s emergence as a global foreign direct investment destination has been significantly bolstered by the entry of tech giants like Microsoft, Google and AWS, whose large-scale data centre investments underscored the country’s strategic advantages.
“These investments have not only established Malaysia as a critical node in the global digital infrastructure network, but have also heightened its profile among investors from other asset classes and manufacturers.”
He emphasised that the presence of these global players signals confidence in Malaysia’s stable governance, robust infrastructure and competitive costs, attracting diversified investments across logistics, manufacturing and mixed-use developments.
“This momentum is transforming Malaysia into a regional hub for innovation and economic activity, with ripple effects on the real estate, industrial and commercial sectors.”
