Servers for data storage are seen at Advania's Thor Data Center in Hafnarfjordur, Iceland on Aug 7, 2015. (Reuters photo)

With the rapid growth and endless demand for data storage, many developers realise that data centres are becoming a more popular alternative real estate development option, according to property consultancy JLL.

Demand has surged across all sectors in response to the growing popularity of Internet of Things (IoT), cloud computing, IT outsourcing and mobile data.

Up until now, data centres in Thailand were generally developed to serve a company’s sole requirements and built specifically for it as a single occupier. They were generally managed and operated in-house by companies, mainly in the financial and government services sector.

There are just a limited number of data-centre service providers in the Thai market at present, such as True IDC, CAT Telecom, NTT Communications (Thailand) and TCC Technology.

Dexter Norville, a director at JLL, said: "One common hurdle that many potential developers of data centres seem to face in Thailand, and most other Asean countries, is that many developers may have suitable land to construct a data-centre facility but they do not have the technology component."

"Alternatively, there are many technology companies that do not own or have access to the land that they would like to develop," he added 

Observations by JLL show there is growing interest in Thailand from local developers looking for advice on data-centre space, as well as from operators and joint ventures in this alternative market.

"The more viable option for many developers to potentially forge a market share in should, however, be in the provision of external data centres which can provide managed data hosting to multiple companies," said Mr Norville.

These types of data centres basically provide a one-stop shop whereby companies rent the servers and other specified equipment from the data-centre developer/operator and the operator will provide the expert management and operation of those systems, he added.

"Another alternative is co-location data centres which are generally referred to as the leasing of a secured space with all the required connectivity and the needed basic infrastructure. Users or tenants will then purchase their own servers and networking systems, as well as have their own staff to manage these resources. 

"A key driver for the increased interest to develop data centres is fundamentally the same as most real estate developments and it is financial, with rents currently ranging anywhere between 30,000 baht to 60,000 baht per rack," he said.

In 2016, the data-centre market in Asia-Pacific was $12 billion. According to JLL, the market size is expected to grow by 27% a year and surpass the European market in total size by 2021. This increases the need for real estate space in this niche area.

Also of interest to developers in Thailand is that the current two main leading data-centre markets in the region -- Singapore and Hong Kong -- are increasingly facing future land shortages. This will fuel the interest in Thailand as a key emerging market. 

"This is an exciting real estate opportunity for developers in Thailand with potential driven by continued increased local demand and from other more established regional markets," said Mr Norville.