Japan Colocation Market - Strategic Insights and Forecasts (2026-2031)

The Japan Colocation market is forecast to grow at a CAGR of 10.1%, reaching USD 28.9 billion in 2031 from USD 13.5 billion in 2026.

Japan is one of the leading APAC nations where technical advancement and digitization are on the rise. Moreover, the country is experiencing significant growth in its internet penetration and 5G adoption, which has increased its overall data traffic, which has provided a major scope for the development of advanced infrastructure for data stacking and processing. According to the GSMA’s “Mobile Economy Asia Pacific 2023” report, in 2022, 5G accounted for 26% of Japan’s internet subscriptions, and as per the same source, 5G subscriptions are expected to reach 92% by 2030.

Japan Colocation Market Growth Drivers:

• Favorable initiatives to bolster digital transformation are driving the overall market expansion.

Significant growth in digital transformation and the establishment of data protection are driving the demand for colocation data centers in Japan for effective data processing and security. For instance, the Japanese government's “Digital Agency” aims to improve the online services and infrastructure of the country’s public sectors.

Additionally, to tackle the growing cyber threats and unauthorized data access, the Japanese government is implementing various schemes and data protection policies. For instance, in April 2022, the amended “Protection of Personal Information Law” came into effect in Japan, which aimed to bolster personal data privacy and cybersecurity. Such rules and policies will bolster colocation infrastructure development in Japan as they offer high data processing security.

• Investment in 5G networks has stimulated the Japan colocation market growth in Japan.

The introduction of 5G has created a boom in the volume of data transmission over the years, which has created a demand for more data centers. Colocation data centers employ up-to-date servers and network technology, which optimizes the overall data processing and storage functions, thereby improving the overall scalability.

Japan is actively investing in 5G technologies through various collaborations and launches to provide users with an effective connectivity and browsing experience. For instance, in May 2024, KDDI Corporation and SoftBank Corp agreed to expand their 5G network in Japan through their joint venture “5G Japan Corporation”. Through the expansion, the companies will establish 100,000 base stations by 2030.

• Large enterprises will show significant growth

Japan's colocation market, by enterprise size, is analyzed as small, medium, and large, where the large enterprise holds a considerable market share and is projected to show significant growth during the forecast period.

Strategic investments undertaken by the companies to boost digital infrastructure, followed by collaboration with major data centers and colocation service operators in major sectors such as healthcare, BFSI, and private services, are acting as major driving factors for the segment's growth. For instance, in June 2022, Salesforce Japan Co, Ltd and Fujitsu Limited announced their collaboration for the development of a new digital solution for the Japanese healthcare sector.

Japan Colocation Market Key Developments:

• In December 2022: ESR Group Limited formed a joint venture with STACK Infrastructure for the development of a 72MW data center in Osaka, which would offer connectivity services, inclusive of hyperscale, custom-built-to-suit, and colocation to cloud services.

• In September 2022: GLBB Japan started providing its colocation services in Okinawa by launching its “GC2” site, before which the company launched “GC1” in February 2022 in Tokyo.

Japan Colocation Market Scope:

Japan Colocation Market Segmentation:

• By Type

  • Retail

  • Wholesale

  • Hybrid

• By Enterprise Size

  • Small

  • Medium

  • Large

• By Industry Vertical

  • BFSI

  • Communication and Technology

  • Education

  • Healthcare

  • Media and Entertainment

  • Retail & E-Commerce

  • Others