Southeast Asia’s data centre business is entering a different phase. Demand remains strong, but investors are now paying closer attention to something more basic: which companies already have land, electricity, approvals and the ability to build at scale.
ARC Group expects this shift to influence data centre deals during 2026. Instead of buying individual facilities, investors are likely to show greater interest in complete operating platforms, controlling stakes and data centre businesses separated from telecom companies.
There is a practical reason behind the change. Building a data centre from scratch takes time. Suitable land has to be identified, power connections secured and regulatory approvals obtained. Buying an existing operator can give an investor a much quicker entry into the market.
AI is putting more pressure on data centre capacity
Artificial intelligence has become one of the major drivers of data centre expansion in Southeast Asia.
ARC Group expects the region’s capacity to reach between 5.2 GW and 6.5 GW by 2030, roughly three times the 2025 level. AI computing demand could increase tenfold during this period, while conventional cloud services will continue adding to infrastructure requirements.
Generative AI is another part of the growth story. The Southeast Asian generative AI market is projected to increase from US$0.8 billion in 2023 to US$13 billion by 2030, representing a compound annual growth rate of around 50%.
AI infrastructure, however, has different requirements from a regular enterprise cloud environment.
Training large AI models needs powerful clusters of servers along with sophisticated cooling systems. AI inference has another requirement: speed. Facilities often need to be closer to users and major commercial centres to reduce latency.
This puts additional value on data centres located near important cities. Facilities capable of supporting high-density computing workloads could also attract better valuations.
Electricity availability will play an equally important role. As AI workloads consume more power, operators with reliable access to electricity will have a clear advantage.
Sovereign cloud plans bring new customers
Government policy is adding another layer of demand.
Several Southeast Asian countries are developing sovereign cloud and national data programmes. These initiatives are designed to keep sensitive information within national borders while supporting domestic digital and AI capabilities.
Malaysia, for instance, allocated MYR 2.3 billion, or about US$490 million, for a sovereign AI cloud in its 2026 budget. This forms part of a wider MYR 5.9 billion commitment towards AI-related research, development, commercialisation and innovation.
Indonesia is seeing rapid cloud adoption as well. ARC Group estimates that the country’s cloud computing market has grown at a compound annual rate of 48% over the past five years. Around 90% of companies are moving towards cloud solutions.
Singapore is further ahead. Most less-sensitive digital workloads there have already moved to commercial cloud platforms.
For data centre operators, this means future demand will come from a wider set of customers. Global hyperscalers remain important, but domestic businesses, regulated industries and government-linked organisations are also becoming significant users of cloud infrastructure.
Big technology companies are spending billions
Major technology companies have already committed substantial capital to Southeast Asia.
According to ARC Group, announced hyperscaler investments in the region exceed US$20 billion.
Amazon Web Services has committed SG$12 billion, approximately US$9 billion, to Singapore between 2024 and 2028. AWS also launched its first cloud region in Thailand in January 2025.
Google has invested a cumulative US$5 billion in Singapore and committed another US$2 billion towards its first data centre and cloud region in Malaysia.
Microsoft has announced US$2.2 billion for Malaysia and US$1.7 billion for Indonesia over the 2024–2028 period.
Such investments create opportunities far beyond the technology companies themselves. New facilities need land, construction partners, electricity connections, fibre networks and experienced operators.
Companies that have already secured these resources are therefore becoming more attractive acquisition targets.
Cross-border cloud rules could support regional deals
Regulation is also beginning to support operators that want to build businesses across several Southeast Asian markets.
ARC Group points to the ASEAN Framework on Cross-border Cloud Computing, endorsed in January 2026.
The framework introduces Trusted Data Corridors. These corridors are intended to allow data to move between accredited data centres in participating countries where domestic data protection systems are considered legally comparable.
Singapore, Malaysia and Indonesia are expected to be among the early participants.
For companies operating across ASEAN, such arrangements could make it easier to move workloads between approved facilities while keeping data within the region.
It could also make operators with facilities in several ASEAN countries more attractive to private equity and infrastructure investors.
Three types of deals could gain ground in 2026
ARC Group expects three transaction models to become more prominent.
- Platform acquisitions: Investors buy established data centre businesses that already have power arrangements, development pipelines and experience operating across markets.
- Minority-to-control investments: An investor starts with a minority stake and has a defined route towards taking control later.
- Telco carve-outs: Telecom companies separate their data centre operations from their main businesses to unlock capital and value.
These structures reflect one of the biggest challenges facing the sector.
Demand for data centre capacity is not the main concern. Finding suitable land, obtaining permits and securing enough electricity have become more difficult.
That makes an established operator considerably more valuable than an undeveloped site.
ARC Group estimates that platforms with secured power, operations across several markets and a strong delivery record could attract valuations of 25 to 35 times EBITDA.
Telecom companies and private capital have an opportunity
Telecom operators could play an important role in the next round of deals.
Many telecom companies already own assets that data centre operators need, including land, fibre networks and edge infrastructure. Separating the data centre division can release capital for the telecom business while giving investors access to established digital infrastructure.
Private equity and infrastructure funds are also expected to remain interested in the sector.
Data centres can provide long-term cash flows while offering exposure to rising demand for AI and cloud services. But quality assets are unlikely to come cheaply.
Operators with secured power, clear expansion plans and experience dealing with regulators could attract several interested buyers.
That may encourage investors to use more flexible deal structures. Taking a minority stake first, with the option to gain control later, allows investors to enter the business without immediately taking on the full operating risk.
Scarcity is pushing valuations higher
Southeast Asia may be preparing for a large increase in data centre capacity, but adding new supply is not getting easier.
Land remains limited in important markets. Electricity availability is becoming a serious consideration, and regulatory approvals can extend development timelines.
An existing platform that has already solved these problems offers something valuable: time.
A buyer can avoid part of the lengthy process involved in securing land, obtaining approvals and arranging power. It can also begin generating revenue sooner.
This explains why established platforms are attracting greater attention.
The Southeast Asian data centre market is gradually moving away from being mainly a story about building new facilities. Consolidation is becoming an equally important part of the industry’s development.
Companies with funding alone may not have the strongest position. Operators that combine reliable power, regulatory approvals, operational experience and a presence across several markets are likely to have an advantage.
AI and cloud demand continue to expand, buying an established data centre platform could prove faster and less risky than developing capacity from the ground up. That shift is likely to shape Southeast Asia’s data centre deal market through 2026 and beyond.
