PHL seen to join Shanghai, SG, Tokyo as region’s top data center hub

The Philippines is likely to join Shanghai, Singapore (SG), and Tokyo as the region’s top data center destination, according to real estate expert Santos Knight Frank (SKF), citing increasing digital consumption in the country and government support.

With information technology (IT) capacity in Metro Manila estimated at 163 megawatts (MW), the Philippines is seen as a strong candidate for hyperscalers looking to expand, SKF Chairman and Chief Executive Officer Rick M. Santos said at a briefing on Thursday.

Hyperscalers are big technology organizations with massive network, power, and space requirements.

“The country has high digital consumption due to rapid e-commerce adoption and Filipinos being one of the top social media users in the world. Data centers are looking for hubs where most of their users are at, and that’s the Philippines,” Mr. Santos said.

In Asia, the powerhouses are Shanghai with a capacity of 1183MW, Singapore with a 1065-MW capacity, and Tokyo with a 998-MW capacity.

With the current ban on data centers in Singapore, other markets are being looked at, with Manila’s capacity for IT, land, and engineering-trained talent regarded to be strong for Southeast Asia.

“There’s government support as well, with the Department of Information and Communications Technology encouraging use of the cloud for the development of infrastructure,” Mr. Santos said.

The growth in e-commerce and logistics has also created a lot of demand for construction material storage and warehouses, according to the SKF’s analysis. With this, the growth of logistics space outside of the Philippine capital is expected to continue as data centers are built.

The expansion of industrial parks in other areas like North Luzon will “benefit the industrial sector,” said Mr. Santos.

Morgan McGilvray, SKF’s senior director for occupied strategy and solutions, added that the office market has a similar optimistic provincial outlook. The key driver for this is companies expanding into regional locations like Iloilo, Davao, Bacolod, and Clark.

“This is seen among business process outsourcing companies looking to establish various headquarters,” he said.

SKF also noted that the annual Metro Manila office space supply saw a healthy jump to 10.4 million square meters (sq.m.) in 2022, from 7.6 million in 2021.

“This is a mixture of spillover from construction delays during the pandemic and developers building and supplying more space again,” Mr. McGilvray noted. — Brontë H. Lacsamana