Property consultant Jones Lang LaSalle Inc. (JLL) said the Philippines is poised to attract a significant level of investment in data centers, amid increasing demand for cloud-based services globally, particularly in the e-commerce sector.
“Demand for data centers – the buildings that house computer systems and servers that store and process the world’s data – has skyrocketed due to the widespread adoption of digital communication tools and e-commerce,” JLL said.
On Tuesday, Santos Knight Frank, another property consultant, said it is tracking 220 megawatts (MW) worth of expressed interest, 90 MW of which came in the second quarter of the year alone.
Charlie McNaught, JLL Philippines director for capital markets, said the interest in the data center sector in the Philippines is not surprising, given that it is home to 76 million internet users who spend an average of more than 10 hours on the internet daily.
“This provides a solid base to fuel data consumption which is expected to further grow as we anticipate greater data demand in the future on the back of wider technology adoption.
With the sector in the Philippines still in its early stages of development, it allows managers to plan in their development strategy to ensure their facilities are constructed and operated in line with current and future ESG (Environmental, Social and Governance) expectations,” he said.
Driven by the shift to cloud-based internet services and online retailing, competition for assets has intensified, thus data center real estate is attracting more interest from publicly traded real estate investment trusts, private equity groups and sovereign wealth funds, JLL said.
“The investment in data centers in the Philippines is expected to grow considerably in the coming years. It is critical that more emphasis is placed on environmental considerations to ensure these newly developed assets are future proofed,” said McNaught.
However, according to JLL analysis, the lack of global data center standards makes it difficult to report in-depth ESG metrics. The same respondents believe the responsibility is on operators to develop their own clear and well-defined key performance indicators to gain the investor trust crucial to create shareholder value and maximize returns.
“The growth of data centres in Asia Pacific comes with a mounting environmental cost but provides necessary impetus for investors and operators to enact more sustainability-based operational and development practices,” said Kamya Miglani, head of ESG Research, Asia Pacific, JLL.
“As more data centers are required regionally, the conversation will inevitably shift towards greening the real estate supporting this sector and alignment with more aggressive ESG strategies,” added Miglani.