Malaysia Data Center Colocation Market - Supply and Demand
Dublin, Oct. 05, 2026 (GLOBE NEWSWIRE) -- "Malaysia Data Center Colocation Market - Supply & Demand Analysis 2026-2031" has been added to ResearchAndMarkets.com's offering.
The Malaysia data center colocation market is projected to grow at a CAGR of 18.60% from 2025 to 2031, supported by hyperscale investment, cloud adoption, artificial intelligence workloads, government incentives, and expanding digital connectivity. Utilized data center area is expected to reach 24.89 million sq. feet by 2031, while utilized rack capacity is forecast to total 609.3 thousand units.
Cyberjaya remains Malaysia's most established data center hub due to its robust power infrastructure, network connectivity, and government support. Johor is rapidly emerging as another major destination, benefiting from its proximity to Singapore, available land, and strong power connectivity. Development is also being supported by dedicated industrial and technology locations, including Sedenak Tech Park (STeP), Nusajaya Tech Park, YTL Green Data Centre Park, Nusa Cemerlang Industrial Park (NCIP), Bayan Lepas Technology Park, and Cyberjaya/MSC Technology Park.
Market Trends and Growth Drivers
Artificial intelligence, machine learning, high-performance computing, and GPU-intensive applications are reshaping Malaysia's data center infrastructure requirements. AI-ready facilities require higher rack densities, advanced power systems, and efficient thermal management. The increased adoption of 42U-52U racks is enabling operators to expand computing capacity within limited floor space while improving rack utilization.
Investment in AI infrastructure continues to accelerate. In July 2025, YTL Corporation signed an agreement with NVIDIA to invest approximately $2.36 billion in Malaysian AI infrastructure, including the development of an AI data center. AI adoption is expected to strengthen over the next two to three years, increasing demand for scalable colocation capacity and advanced cooling systems.
Liquid cooling is becoming increasingly important as operators deploy AI, HPC, and GPU-intensive systems that generate significantly higher heat loads. Malaysia's humid climate also affects the efficiency of conventional air-cooling systems. In June 2025, SK Innovation signed a Memorandum of Understanding (MoU) with Bridge Data Centres to deploy an advanced liquid cooling solution at one of the operator's largest Malaysian facilities. Continued GPU deployment is expected to encourage a broader transition toward liquid-based cooling infrastructure.
Cloud regions and hyperscale data centers represent another major source of market growth. Demand is being reinforced by cloud computing, IoT, big data, robotics, smart-city projects, 5G deployment, and expanding fiber-optic and submarine cable networks. In May 2026, NEXTDC launched a large-scale Kuala Lumpur data center designed to provide approximately 65MW across 196.4 thousand square feet. Its initial phase delivered more than 15MW of IT power capacity.
Government policy is also strengthening Malaysia's position as a regional digital infrastructure hub. In March 2025, the government established the Data Center Task Force (DCTF), managed by the Minister of Investment, Trade and Industry and the Minister of Digital. The initiative is intended to improve industry oversight, support sustainable development, streamline approvals, and encourage domestic and international investment.
Recent Malaysia Data Center Market Developments
In June 2026, Racks Central secured approximately $1 billion from the China-ASEAN Investment Cooperation Fund (CAF) II to expand data center operations across APAC, including Malaysia.
In June 2026, Tanco signed an MoU with China Mobile International to develop an approximately 50 MW data center in Port Dickson.
In June 2026, DayOne partnered with Tenaga Nasional Berhad (TNB) to procure approximately 1.5 GW of solar capacity and 2.2 GWh of battery energy storage for its data center operations.
In April 2026, Digital Edge DC acquired approximately 49.7 acres in Bandar Cemerlang Industrial Park (BCIP), Johor, for about $87 million to support data center development.
In December 2025, DPS Energy collaborated with VCI Energy on a 250 MW solar project intended to power AI data centers across Malaysia.
In August 2025, Maybank signed a five-year contract worth approximately $236.4 million with Microsoft to use its cloud and Artificial Intelligence capabilities.
Malaysia Data Center Colocation Market Segmentation
The cloud & IT sector accounted for approximately 77% of Malaysia's colocation demand in 2025. Its leading position reflects enterprise cloud migration, hyperscale adoption, AI deployment, machine learning growth, and broader digitalization across industries.
Wholesale colocation is projected to generate approximately 89% of market revenue by 2031. Growth will be driven by wholesale leasing, build-to-suit projects, hyperscale campuses, and AI-ready infrastructure. In May 2026, Digital Decarbonization Solutions Platform (DDSP) announced plans for a Johor data center campus with approximately 40MW of power capacity.
Industry Challenges
A shortage of skilled professionals in data center management, cloud computing, and cybersecurity could affect operational efficiency, maintenance, and service reliability. Government agencies, hyperscale operators, and industry participants are responding through vocational education, training partnerships, and workforce upskilling programs.
Environmental impact and land availability are also important considerations. Large energy- and water-intensive facilities can place pressure on local utilities and ecosystems, while greenfield campuses may compete with agricultural or community land-use priorities. Operators can reduce these risks by selecting brownfield sites, adopting energy and water-efficient technology, integrating renewable power, and completing environmental and land-use assessments before development.