Singapore unlikely to attract large data centre investments despite new roadmap: Fitch

Malaysia has drawn most of foreign investments over the past years.

Singapore has recently launched its Green Data Centre Roadmap targeting 300MW of new capacity in the near term, but Fitch Solutions said major foreign investors have already placed their bets in its neighbouring markets and are unlikely to go back. 

Fitch said the sustainability-linked framework, launched on Thursday, is commendable as the initiative marks a first in the industry after Singapore imposed a moratorium on new data centre developments in the country.

The roadmap emphases energy efficiency and sustainability in data centres with the authorities taking a more significant role in the renewable energy transition, cutting edge cooling solutions and modern data centre design. It said such an approach will help prevent excessive regulation in the industry and avoid driving investments away.

Fitch raised its forecast for the city-state’s overall data centre capacity to 1,400MW from 876MW previously to account for the additional capacity from the roadmap.

Despite such efforts, it said market trends and growth momentum have already pushed many foreign investors toward neighbouring markets like Malaysia. It said data centre investments surged in Johor to over 1,800MW as well as in Batam to 285MW.

“We believe it is unlikely that the initiative will rekindle large-scale foreign investor interest in the Singaporean data centre market since neighbouring emerging markets are expecting over 2,500MW of data centre capacity in the near-term,” Fitch said.

“Moreover, leased capacity in APAC continue to highlight AI's pressure on current data centre infrastructure, raising uncertainty about the viability of 300MW of allocated data centre capacity since bookings per customers mostly exceed 1MW,” it added.

Investments in Singapore’s data centre market has remained muted over the past few years as a result of the 2019 moratorium.