The Asia Pacific (APAC) colocation market is expected to grow from USD 20.788 billion in 2025 to USD 37.660 billion in 2030, at a CAGR of 12.62%.
In the data center landscape, colocation refers to the renting out of space for one's hardware to other organizations. In this, an organization offers its hardware and other computing services to a third party for data storage purposes. The main benefit of a colocation service is that it offers selections for the third party to choose the computing hardware services for their data storage. Colocation services come in two basic models: retail and wholesale.
Under the retail colocation model, the costs of the services are generally structured around specific services like space, power consumption, cooling systems, and bandwidth speed. The wholesale colocation model is generally designed for large-scale enterprises or governmental agencies. Under this model, the third party, or the leasing party, is generally responsible for managing and handling the IT operations.
The key driver for the increase in the demand for the colocation market in the Asia Pacific region is the increasing internet adoption in the region and the evolution of the countries in the region as hubs for data centers. The governments of various countries in the region are focusing on the development of data centers in the region. In May 2022, the Karnataka government, an Indian state, unveiled its plan for data centers in the state. This plan aims to position the state as the 'Destination of Choice' for the futuristic data centers in the nation. In April 2021, the state government of Uttar Pradesh in India announced a Data Center Policy of 2021 that aims an investment of about US$2.7 billion, or INR 20,000 crores, to develop a 250MW data center industry in the state.
Another major reason for the development of colocation and data centers is the increase in internet service usage in the region. According to the data published by the Ministry of Communication of the Indian Government, the total internet usage in the country was about 850 million in 2022. This data suggests that about 61.62% of the total population in the nation uses the Internet and related services. This creates a huge market for the brands operating in the internet landscape to attract consumers in the country.
Further, data from the World Bank also suggests that internet usage in the region increased in various countries. Like in Japan, internet usage will be about 83% in 2021, and the same in China is about 76% in the same year. Internet usage in East Asia was about 76%, whereas a lower percentage of only 43% was recorded in South Asia.
The Asia Pacific (APAC) colocation market is expected to grow significantly, owing to the strong economic growth in the region, coupled with ongoing development in the information and technology industry in the region. The IT and telecommunication industry invests heavily in data center colocation for sustainable growth and productivity. Additionally, the major shift towards digitalization and rising activities of cloud deployment in countries such as India and China are expected to propel the colocation market in the projected period.
Some of the major companies include Equinix, Inc., Verizon, and Rackspace, among others.
The Asia Pacific witnessed an increasing interest in the development of data centers from various countries like India, China, and Japan. These policies and schemes aim to create a futuristic landscape of data centers in the region, with the availability of various governmental and privately owned data centers.
For instance, the government of India laid out its plan for data center development in 2020, which attracted various domestic and international players to invest in the data center landscape in the country, like Amazon, Reliance, and others. Apart from the national policy, the states of the nation, like Uttar Pradesh, Gujarat, and Karnataka, also unveiled their plans for the development and investment of data centers in their respective states.
According to the DataCenterMap, India currently has about 231 data centers in the nation, with more to come. Mumbai had the most data centers, with 34, followed by Bangalore with 31, and Hyderabad and Chennai with 25 data centers each.
The colocation market in India has experienced substantial growth, which is attributed to the development of digital infrastructure and the corresponding usage of cloud services. With the advent of IT-data-driven technologies and the digital shift in sectors, organizations are on the lookout for reliable and scalable data centres or colocation services to support their IT operations. The burgeoning startup ecosystem of India and the presence of multinational corporations in the country fuel the demand, providing an environment that is highly competitive for colocation services providers.
The Department for Promotion of Industry and Internal Trade (DPIIT) recognises organisations as startups under the Startup India programme, subject to the qualifying restrictions specified in G.S.R. notice 127 (E) dated February 19, 2019. Since the commencement of the Startup India programme in 2016, DPIIT has acknowledged 92,683 companies as startups as of February 28th, 2023.
India's transformation from an emerging to a mature market economy will rely heavily on digital technology. India has over a billion mobile phones and 700 million internet connections, leading to rapid development in digital commerce, entertainment, and social media usage. India has the world's biggest mobile data usage, which is continually rising. In addition to this, India's digital economy is expected to reach $1 trillion by 2025, up from $200 billion in 2018.
As India goes digital, the colocation market is poised to grow even further, becoming very suitable for new players as well as the incumbents to improvise and meet this desire for reliable data centre solutions.
Product launches increase demand for data storage, leading organisations to seek colocation services in India, further burgeoning the market. For instance, in January 2024, Digital Realty, the world's largest provider of cloud- and carrier-neutral data centre, colocation, and interconnection solutions, announced the opening of its first data centre in India on a 10-acre campus capable of supporting up to 100 megawatts of critical IT load capacity located in the heart of Chennai's industrial and manufacturing hub.
Furthermore, in January 2024, Vertiv, a global provider of critical digital infrastructure and continuity solutions, announced the opening of a new manufacturing facility in Chakan, Pune, India, to meet the rising demand for data centres and supporting infrastructure solutions worldwide, including India and APAC.
Concurrently, government efforts such as Digital India and Smart Cities emphasise strong digital infrastructure, which drives investment in data centres. For instance, Prime Minister Narendra Modi aims to establish India as a global centre for data centres, recognising their relevance to the country's digital economy. In the Union Budget 2022-23, Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman recommended including Data Centres and Energy Storage Systems in the harmonised list of infrastructure. The combination of such regulations together with the provision of IT sector investment incentives makes investors enthusiastic and daring to invest in the colocation market either locally or internationally, which in turn positively impacts the market growth.
| Report Metric | Details |
|---|---|
| Study Period | 2021 to 2031 |
| Historical Data | 2021 to 2024 |
| Base Year | 2025 |
| Forecast Period | 2026 – 2031 |