While M&A activity dominates the headlines, asset-level deals are also on the rise. In the third quarter of 2024, investment in APAC data centers surged 114% year-on-year to $2.8 billion, according to JLL’s Capital Tracker.

A prime example was the KRW 734 billion sale of Hanam Data Center by IGIS Asset Management, which marked the first-ever sale of a stabilized data center, or a fully pre-committed and operational data center, in South Korea.

“Asset-level trades like this are rarer as data center operators typically prefer to own and develop their own data centers,” says Bob Tan, Executive Director, Capital Markets Transactions, JLL. "However, in markets like Japan and Korea, enterprising investors have been quite successful in securing the land, power, and end-users, making asset-level deals more common at this moment."

The underlying factor driving increased deal activity, whether it’s individual asset deals or large-scale M&A, is the robust demand from consumers, cloud service providers, and artificial intelligence, Tan says.

Limited asset availability, coupled with favorable market conditions, has also contributed to the surge in activity.

The future of data centers looks bright as operators continue to expand to meet demand and investors capitalize on the growth potential.

Deal activity is expected to be driven by M&A at the company level, according to Tan.

“Most operators have invested heavily in building their platforms to where they are today,” he says. “They would prefer not to divest individual assets as it would undermine their overall enterprise value.”

Chua echoes this sentiment, anticipating more joint ventures and M&A in the coming years, especially with limited assets available on the market.

“Operators with strong management teams but limited resources and traction will become prime targets for larger platforms for consolidation or acquisition,” she says.