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Colocation providers are expanding in selected emerging-market metros because AI and cloud growth is increasing demand for high-density facilities, while access to power, delivery schedules, local customers and hosting requirements influence where new capacity can be built. The shift is selective: established hubs remain important, and an announced pipeline or proposal is not the same as an operating data center.
Why are data centers moving to emerging markets?
They are not simply moving away from established hubs. Instead, providers are adding capacity in particular markets where they see demand and a feasible path to delivery. CBRE reported US$11.6 billion in Asia-Pacific data-center investment in 2025 and identified power availability as an increasingly important factor in where capacity can be delivered. Its 2026 report highlighted Malaysia and India among emerging focal points.
AI is an accelerator, but it is not the only driver. Providers and market researchers also cite cloud adoption, broader digital services, customer proximity, connectivity, local enterprise demand and requirements to host workloads locally. High-density computing puts additional pressure on power and cooling; in constrained markets, the ability to secure power and deliver a facility on schedule can weigh more heavily than a location’s traditional advantages. CBRE also points to higher construction costs and longer lead times as factors favoring places where projects can advance more quickly.
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Power availability is a location discriminator, not proof that any particular emerging market has cheap or abundant electricity. A project still depends on secured capacity, grid access and the practical ability to energize the site on schedule. As CBRE’s Ada Choi, Head of Research, Asia Pacific, put it: “Growth is shifting from traditional Tier I markets toward power-advantaged locations.” The statement describes a trend, not a universal relocation of capacity.
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Colocation lets investment scale in stages
In a colocation facility, multiple customers use data-center capacity rather than each building a separate site. An Atlantic Council report, citing 2023 data, said more than 60% of newly announced capacity in secondary and emerging markets that year was colocation. The report describes the model as limiting exposure for a single investor and allowing capacity to scale incrementally—a useful structure where demand is growing but its eventual size is uncertain.
Where is growth showing up?
The evidence points to a cluster of markets and metropolitan areas, not uniform growth across whole regions. The figures below measure different things—investment, live capacity, inventory, designed capacity or plans—and should not be treated as interchangeable.
| Market | Reported evidence | What the figure represents |
|---|---|---|
| Latin America | Colocation inventory grew 20% in 2025; average vacancy was 9%, and 42% of the colocation and hyperscale construction pipeline was precommitted. | JLL’s year-end 2025 market figures. Demand remained concentrated in Brazil, Mexico, Chile and Colombia; these statistics do not mean every announced project is operating. |
| Asia-Pacific | US$11.6 billion in data-center investment in 2025. | CBRE’s 2026 report identifies investment across the region and highlights Malaysia and India among emerging focal points. Investment is not a measure of live capacity. |
| Johor and other established hubs | Johor live capacity grew 53% year on year in 2025; Melbourne grew 37%; Singapore and Hong Kong SAR grew around 6–8%. | CBRE’s 2026 report compares live-capacity growth. Johor’s faster growth coexists with expansion in mature markets; it does not show those hubs are being abandoned. |
| Jakarta, Indonesia | STT GDC announced more than 360 MW of AI-ready IT capacity across multiple campus phases. | A 2026 provider development pipeline, not 360 MW already live. |
| Kuala Lumpur, Malaysia | NEXTDC said its KL1 facility launched in May 2026, with 65 MW of designed IT capacity and a long-term AUD$1 billion investment. | The operator’s launch announcement and descriptions of designed capacity and investment; designed capacity is not the same as proof that all capacity is energized or occupied. |
| Lagos and Delta State, Nigeria | Equinix announced a planned $22 million LG3 investment and an approximately $100 million Africa plan, with a Q1 2026 target opening for LG3. Separately, USTDA funded a feasibility study for two proposed AI-ready facilities. | The opening date was an announced target, not current operating confirmation. The USTDA-backed work concerns proposals in Lagos and Delta State, not a construction commitment. |
| Sub-Saharan Africa | Raxio announced $100 million in IFC financing and said it would help double its colocation deployment within three years. | Financing and a company expansion plan for a multi-market platform, not measured completed capacity. |
What the regional examples do—and do not—show
Latin America: a record delivery year, still concentrated
JLL characterized 2025 as a record year for new Latin American colocation inventory delivery. The 20% inventory increase, 9% average vacancy and 42% precommitment share indicate a growing market with demand concentrated in Brazil, Mexico, Chile and Colombia. They do not establish that every country in the region has the same customer demand, availability or pipeline quality.
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Malaysia and Indonesia: power-advantaged growth, with different project stages
CBRE’s 2025 figures put Johor live-capacity growth at 53% year on year, well above the roughly 6–8% reported for Singapore and Hong Kong SAR. That comparison helps explain why providers are looking beyond traditional hubs, but it is a growth-rate comparison—not a comparison of total market size or proof that capacity is shifting out of Singapore.
In Indonesia, STT GDC’s 2026 announcement describes a multi-phase Jakarta pipeline exceeding 360 MW of AI-ready IT capacity. The company says Greater Jakarta capacity can keep workloads closer to users, businesses and regulators. Indonesia’s Ministry of Investment also points to the country’s market size, geographic position and government support. These are provider and government rationales, not independent assessments of compliance with particular regulations or proof that the pipeline has been completed.
In Malaysia, NEXTDC announced that KL1 launched in May 2026, with 65 MW of designed IT capacity and a long-term AUD$1 billion investment. The company describes the facility as sovereign-ready. That description is the operator’s positioning; buyers should verify applicable legal requirements separately rather than infer compliance from a marketing term.
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Nigeria: distinguish an announced target from feasibility work
Equinix announced LG3 as a planned $22 million investment, part of an approximately $100 million Africa plan, with a target opening in Q1 2026. The announcement described Lagos as strategically positioned for subsea connections. The opening target has passed, but the cited announcement does not establish whether the facility opened on schedule or is operating.
USTDA separately funded a feasibility study for proposed AI-ready facilities in Lagos and Delta State. Study funding supports planning work; it is not evidence of a construction decision. The available announcements do not establish whether those proposals advanced beyond feasibility.
Sub-Saharan Africa: financing supports a plan, not an observed delivery total
Raxio announced $100 million in IFC financing in 2025 and said the funding would help it double colocation deployment within three years across its platform in multiple African markets. This is meaningful evidence of capital and planned expansion, but the announcement is not a measurement of capacity already built or deployed.
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How to assess a market or project
For a business choosing where to colocate—or an investor comparing developments—compare the project’s actual delivery conditions, not just the headline megawatt figure or the label “emerging market.”
- Power: Ask whether capacity is secured, how grid access will be delivered and whether the site can be energized on the promised schedule. Power availability is a key location factor, but the cited evidence does not establish that a market has cheap or abundant power.
- Delivery stage: Establish whether the number refers to live capacity, designed IT capacity, construction, a provider pipeline, a proposed site or a feasibility study. Confirm the stage and date with the operator before treating planned megawatts as available.
- Demand and maturity: Compare existing inventory, vacancy, precommitment and the local customer base. Latin America’s 9% average vacancy and 42% pipeline precommitment are regional figures, not a forecast or guarantee for an individual facility.
- Connectivity and proximity: Check routes to users, cloud and network ecosystems, and relevant subsea connections. Equinix’s description of Lagos’s subsea position is company-provided context, not an independent connectivity assessment.
- Local hosting and governance: Determine whether customers need workloads hosted near users or under local governance rules. Provider claims such as “sovereign-ready” do not by themselves establish compliance with a specific law.
- Funding and execution: Distinguish capital committed to a facility from platform financing, a company expansion plan or funding for feasibility work. Each supports a different stage of execution.
What forecasts say—and why they are not delivery data
A 2025 UNEP Copenhagen Climate Centre report forecast that developing regions would contribute at least 10–15% of the 10 GW of capacity it expected to break ground by 2025. The same report projected roughly 400 MW of African capacity by 2025 and 1.3 GW by 2027, and 5.2–6.5 GW for Southeast Asia by 2030. These are forecasts with stated horizons, not verified delivery totals; the cited figures alone do not establish how much capacity actually broke ground or is operating.
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