Data centre boom tests resources: JLL Malaysia

KUALA LUMPUR: Malaysia's surge in data centre constructions is putting strain on power, water, and renewable energy sources, according to JLL Malaysia. Resource availability and sustainability are emerging as critical factors in facilitating new developments, despite concerns over potential oversupply due to the ongoing influx of data centre investments.

JLL Malaysia's data centre expert, Keith Ng, confirms that demand remains robust, driven by the rapid growth of artificial intelligence (AI) and cloud computing sectors. Ng noted that the expansion of AI and cloud services is sustaining demand for data centre facilities, which require substantial power and water resources to function effectively.

He also emphasized that the government is taking the right approach in ensuring sufficient availability of essential resources, particularly power and water, to support these developments. Ng highlighted that developments located in areas with adequate resources would be better positioned to support the sector's long-term growth.

While basic infrastructure requirements are crucial, the adoption of renewable energy and the social impact of data centre developments are gaining prominence in the approval process. JLL chief growth officer Christophe Vicic stated that renewable energy should account for 30% of an investment, and developers must consider the proximity of their proposed facilities to residential areas and public buildings.

The emphasis on resource availability is coinciding with Malaysia's efforts to attract digital infrastructure investments, fueled by growing demand for AI, cloud computing, and other technology-related services. However, sustaining this momentum will depend on the effectiveness of infrastructure development keeping pace with the sector's expansion.

JLL's broader assessment of Malaysia's industrial market also underscores the growing importance of power availability, as electricity supply poses a challenge for attracting higher-value manufacturing investments, especially in the semiconductor and electrical and electronics sectors. Derek Yap, JLL Malaysia's industrial and logistics representative, noted that although these manufacturers require less electricity than data centres, power supply remains a constraint that could impact investment decisions.