Vietnam surfaces as a swiftly expanding data center market
Vietnam stands out as one of the most rapidly expanding data center markets worldwide, propelled by the digitalization initiatives of local small and medium-sized enterprises (SMEs), a tech-savvy young populace, the onset of 5G technology, a rising need for self-reliant digital infrastructure, and the imperative of data localization.
The Vietnamese data center market soared to over $1 billion last year, nearly doubling its 2022 figure. Currently, the bulk of players in this sector are domestic telecommunications companies.
According to Savills Vietnam, a real estate consultancy firm, there are 28 data center projects across the nation boasting a cumulative capacity of 45 MW, with 44 service providers actively involved. Notably, in August 2022, Amazon Web Services (AWS) unveiled plans to establish data centers in both Hanoi and Ho Chi Minh City.
Similarly, a study by Cushman & Wakefield Vietnam indicates that compared to established markets like Singapore, Tokyo, Sydney, Beijing, and Shanghai, Vietnam’s data center industry remains relatively youthful. While major global cloud service providers have yet to establish a substantial presence, certain international telcos have entered the market through partnerships with local counterparts. Moreover, small and medium-sized projects undertaken by local firms are underway in both Ho Chi Minh City and Hanoi.
Trang Bui, CEO of Cushman & Wakefield Vietnam, highlights the nation’s rapid population growth, particularly in the middle class, urbanization trends, high internet penetration, and widespread digital adoption in banking and business operations.
Despite these advantages, Vietnam currently lacks data center infrastructure on a global scale relative to its population size. This presents challenges for domestic investors, including construction complexities, a shortage of skilled labor, and logistical issues within the supply chain.
Cushman & Wakefield Vietnam’s experts recommend that investors concentrate on larger-scale projects rather than numerous small facilities. The CEO suggests that southern provinces could emerge as favored destinations, given their ample land reserves, accessible electricity in industrial zones, and key national submarine cable landing stations located in Quy Nhon, Da Nang, and Vung Tau. Additionally, renewable energy sources account for a significant portion of the national energy mix.
Data centers are expected to play a pivotal role in supporting Vietnam’s ongoing digital transformation. Therefore, despite being in its nascent stages, many foreign investors eagerly anticipate forthcoming investment-attracting policies to meet the rising demands of the sector.
