Ho Chi Minh City among top markets for data centre development

The remaining top 10 markets in the category are: Columbus, Santiago, Johannesburg, Atlanta, Nashville, Phoenix, Austin, Denver, and Chicago, according to a report released by Cushman & Wakefield Vietnam on February 2.

The annual report, now in its fourth year, ranks major data centre markets around the world according to 13 weighted categories including market size, connectivity, power cost and environmental risk to determine the top overall markets in each category.

According to the latest Q4 2022 Ho Chi Minh City marketbeat report, the average rental price reached $159 per sq.m per lease cycle, up 3 per cent on the quarter and 10 per cent on-year.

Vietnam is a frontier data centre market

Vietnam may be a frontier data centre market, but it has numerous fundamentals that would suggest great potential for development. The country currently has 70 per cent internet penetration, with an estimated 29 million people yet to get online. Over 48 per cent of Vietnam’s capacity is located in the capital of Ho Chi Minh. Currently, only a few multinationals are locally requiring high-level capacity.

The common approach for international operators is to partner with the local telecommunication operators. There is a sizable lack of existing infrastructure relative to the population of the market and demand for internet services. This represents a major opportunity at both the content provision and infrastructure establishment level.

South of Ho Chi Minh is preferred as a hub for data centres, especially for cloud services platform providers, due to latency issues and securing of manpower. Increasing land prices, limited land availability (especially for hyperscale) and limited current or future power supply in Ho Chi Minh directly are pushing new data centre developments to Binh Duong or Dong Nai provinces.

"Vietnam's digital and data infrastructure is currently fragmented and underdeveloped compared to the market's population size and demand for internet services,” said Bui Trang, country head of Cushman & Wakefield Vietnam.

“However, this limitation is also an opportunity for investors to participate and build data centers early. According to our records, the majority of foreign developers coming to Vietnam will desire through signing cooperation agreements with domestic developers.”

Cushman & Wakefield’s head of Data Centre Advisory Team, Asia Pacific, Vivek Dahiya, said interest and investment in the region would continue at pace as the sector evolved.

“We are seeing significant investment and interest in Bangkok, Ho Chi Minh, Hyderabad, Johor, and Manila, and we expect this to continue, along with interest in other primary and secondary markets in the region. Data centres are a rapidly evolving asset class, as evidenced by this report. Last year, Portland ranked 10th. This year it tied for first. We expect such strong movements to continue in the years to come as the sector evolves and matures,” Dahiya said.

Data centres mark new digital stage Domestic and international investors are increasingly turning to alternatives in the Vietnamese market such as data centres and self-storage services to diversify their portfolios and enhance return.

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Data centres in Vietnam: an investment goldmine In 2016, Vietnam was already described as Southeast Asia’s Silicon Valley. Its emerging sectors and fast-growing industries included fintech, telecommunications, electronics and computer manufacturing, and information and telecommunications services. Now, the country is one of the fastest-growing digital economies in Southeast Asia and on track to reach an internet economy worth $57 billion by 2025.

New data centres popping up in Vietnam’s major cities The unveiling of new data centre plans in Vietnam is increasing rapidly, with the entry of a series of international and domestic corporations claiming to be building the biggest and best in-demand facilities.