The flurry of deals comes at an inflection point when data centers in the region are reaching operational status.

“We’re nearing the tail end of a wave of land acquisition and construction,” says Tan. “Operators and investors will soon need to decide on the optimal strategy to maximize the value of their new assets, which could lead to more M&A or joint ventures.”

The robust fundamentals of the APAC market make it a prime investment destination. While still relatively nascent compared to more mature data center markets, the region is experiencing rapid growth.

In Southeast Asia, for instance, the sizable domestic markets, rising mobile penetration, and the soaring demand for cloud services are creating unprecedented demand for data centers.

“The APAC data center market is still considerably underdeveloped and underserved compared to the Americas and Europe,” says Celina Chua, Data Center Client Solutions Director, Capital Markets, Asia Pacific, JLL. “The implementation of data localization laws in some markets is also accelerating the development of local data centers.”

In more established markets like Japan and Australia, government-led digital transformation initiatives are further driving demand.

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.