Data Centre Market
Malaysia’s data centre market remains on a growth trajectory, while the next phase becomes increasingly shaped by infrastructure credibility, resource accountability and broader stakeholder confidence.
Digital economy framework sets long-term direction
MD2030 and AI framework support Malaysia's digital economy ambition
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Malaysia Digital 2030 sets the long-term direction — targeting a 30% digital-economy share of GDP and 500,000 high-value digital jobs by 2030.
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Hyperscaler commitments keep landing — DayOne pledged RM 28 bil, Google's US$2 bil investment has exceeded expectations, and Alibaba Cloud opened its third Malaysian region.
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Capital markets are maturing around the sector — Sime Darby Property's RM 1.25 bil New Economy Venture fund drew EPF, LTAT and Great Eastern, pointing toward future REIT and institutional participation.
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Power and new locations shape the next phase — operators have secured over 1GW of renewable capacity, while AirTrunk's RM 12.7 bil Johor plan adds 280MW across two new data centres.
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Malaysia Digital 2030 (MD2030), launched by Prime Minister Datuk Seri Anwar Ibrahim in June 2026, sets the national direction for digital economy growth and AI adoption through 2030. The plan targets a 30% digital economy contribution to GDP and 500,000 high-value digital jobs, providing a broader policy backdrop for long-term demand in cloud, AI and data centre infrastructure.
Malaysia is strengthening its AI governance framework through the proposed AI Governance Bill and the establishment of a Data Commission by 4Q2026. The National AI Office's role is set to be formally empowered in July 2026 in overseeing AI-related matters, expected to improve regulatory clarity, strengthen data governance and support the responsible deployment of AI technologies.
Recent announcements from hyperscale and cloud operators indicate that Malaysia remains an important location within regional data centre deployment strategies. DayOne announced a RM 28 billion investment commitment and identified Malaysia as a core hub within its regional expansion strategy. ByteDance is reportedly expanding its data centre investments in Johor, while Alibaba Cloud launched its third cloud region in Malaysia. Meanwhile, Google's US$2 billion investment announced in 2024 has progressed and exceeded initial expectations, positioning the nation as a regional hub for cloud computing and AI innovation.
The government has strengthened its approval framework for data centre developments amid rising electricity demand and concerns over 'phantom' power reservations that may not translate into actual deployment. Under the revised framework, investors are required to demonstrate secured demand and financial commitment, while electricity supply is aligned with actual operational requirements rather than maximum capacity requests. Policymakers have placed greater emphasis on ensuring that power and water resources are allocated to projects with credible deployment plans and stronger economic value creation, with the Prime Minister recently indicating that non-AI data centre investments may face stricter evaluation depending on their resource requirements.
Data centres are beginning to attract greater capital market interest as the industry matures. GDS-backed DayOne is reportedly exploring a US listing at a valuation of up to US$20 billion. With an increasing number of real estate developers participating in the data centre value chain through build-to-suit developments and strategic partnerships, the emergence of recurring income streams could potentially support future REIT listings and attract broader institutional investment.
Sime Darby Property's RM 1.25 billion New Economy Venture fund marks a clear local example of this shift. Focused on build-to-suit-to-lease data centres, industrial and logistics developments, the fund has secured full capital commitment from institutional investors including EPF, LTAT and Great Eastern Life Assurance Malaysia. Recent regional platform activity also points to deeper institutional interest: Blue Owl-backed STACK Infrastructure is reportedly exploring a potential sale of its Asia Pacific data centre operations at a valuation of up to US$30 billion, while a KKR-led consortium with Singtel has agreed to fully acquire ST Telemedia Global Data Centres at an enterprise value of approximately US$13.8 billion.
As AI and data centre developments continue to drive electricity demand, operators are increasingly securing renewable energy sources. DayOne has secured more than 1GW of renewable energy capacity in Malaysia, while Google entered renewable energy agreements involving a 20MW solar power supply arrangement with TotalEnergies and a 30MW solar project under the Corporate Green Power Programme. Amazon Web Services (AWS) announced its first renewable energy project in Malaysia through a 23MW solar facility capable of supplying electricity to approximately 50,000 homes. TNB recently announced 4.3GW of installed renewable energy capacity.
Beyond Johor and Klang Valley, several states are beginning to attract data centre and AI-related development interest. Recent announcements include a proposed US$1.1 billion AI data centre project in Melaka, a RM 9 billion data centre investment proposal in Jasin, Melaka, and a RM 1 billion AI park development in Perak. While most developments remain in planning or early execution stages, the announcements indicate growing interest in alternative locations.
Klang Valley: Notable Land Transactions, 1H2026
| Location | Land Size (Acres) | Consideration (RM million) | Purchaser |
|---|---|---|---|
| IOI Industrial Park, Banting | 136.03 | 740.68 | Bridge Data Centres |
| Kapar | 157.07 | 687.89 | WG Malaysia VIII Sdn Bhd (DayOne) |
| Cyberjaya | 10.00 | Undisclosed | AIMS Data Centre |
| NCT Smart Industrial Park, Sepang | 100.00 | Undisclosed | Undisclosed |
Sources: Bursa Malaysia / Knight Frank Malaysia
Johor: Notable Land Transactions, 1H2026
| Location | Land Size (Acres) | Consideration (RM million) | Purchaser |
|---|---|---|---|
| Bandar Cemerlang, Ulu Tiram | 49.72 | 346.53 | Digital Edge Data Centers |
| QUANTUM Edge, Kulai | 49.59 | 280.80 | KNBDC Malaysia Five Sdn Bhd |
| Gerbang Nusajaya | 65.28 | 398.11 | DayOne Data Centers |
Sources: Bursa Malaysia / Knight Frank Malaysia
Malaysia
Growth continues but enters a selectively approved phase
Underlying demand remains intact as the market shifts toward projects backed by committed demand, execution certainty and responsible resource use.
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The Malaysia data centre market is expected to remain on a growth trajectory, although the sector is entering a more disciplined phase of development. The continued expansion of hyperscalers and data centre operators, together with ongoing capacity delivery, indicates that underlying demand remains intact. At the same time, more stringent approval requirements and increasing scrutiny over power and water resources suggest that future developments will be assessed more selectively. This marks a shift from prioritising capacity expansion towards projects supported by committed demand, execution certainty and long-term operational sustainability.
As the market matures, reliable access to power, water and fibre connectivity will become a key differentiator in site selection. The growing scale of hyperscale and AI-driven facilities places greater emphasis on long-term utility availability, infrastructure scalability and responsible resource management. Future development is expected to remain concentrated in powered, infrastructure-ready locations that can support expansion while maintaining broader stakeholder confidence.
Geopolitics lifts Malaysia’s regional standing
Geopolitical uncertainty is reinforcing Malaysia’s appeal, while institutional capital deepens as the sector matures toward REITs and M&A activity.
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Malaysia’s position as a regional data centre deployment market could strengthen as geopolitical uncertainty reshapes investment priorities. Recent tensions in the Middle East have placed greater emphasis on policy stability, predictable investment conditions and operational resilience, particularly as operators review regional deployment risk. However, Malaysia’s ability to capture this opportunity will depend on infrastructure capacity, delivery readiness, and clarity in policy and approval processes.
As more facilities become operational and generate recurring income streams, the sector is expected to attract broader participation from institutional investors. Growing capital market activity, including IPOs, REITs and merger and acquisition activity, signals the continued maturation of data centres into an institutional investment asset class.