Colocation providers are expanding in selected emerging and power-advantaged markets because AI and cloud demand are adding pressure to deliver high-density capacity where power, connectivity and customers can be reached. The shift is selective: established hubs remain active, and announced projects range from launched facilities to development pipelines and feasibility studies—not all are operating data centers.
Why are data centers moving to emerging markets?
AI workloads need substantial computing capacity, while cloud adoption, digital services and local hosting needs are also growing. Providers and market researchers point to power availability as an increasingly important factor in deciding where new facilities can be delivered. Construction cost, lead times and the ability to secure power on schedule also shape site choices. That does not establish that any particular emerging market has cheap or abundant power; buyers and investors need project-level evidence about grid access and energization timelines.
Colocation can suit demand that grows in stages: multiple customers share a facility rather than each building a separate site. The Atlantic Council, citing 2023 data, reported that more than 60% of new data-center capacity announced in secondary and emerging markets that year was colocation. Its analysis describes the model as limiting a single investor’s exposure and allowing incremental scaling—useful characteristics where demand is still developing, but not proof that a particular project will succeed.
Providers also cite proximity to users and local hosting requirements. STT GDC says its Greater Jakarta capacity would keep workloads closer to users, businesses and regulators; NEXTDC describes its Kuala Lumpur facility as sovereign-ready. These are companies’ descriptions of their offerings and rationale, not independent findings that a facility meets a specific law. Regulatory compliance requires separate legal review.
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How is AI changing data-center locations?
AI raises the value of facilities designed for high-density computing, but it is not the only source of demand. Cloud growth, enterprise digitalization, connectivity and local customer needs matter too. In CBRE’s 2026 report on 2025 activity, APAC data-center investment reached US$11.6 billion, and the firm identified power availability as a stronger determinant of where capacity can be delivered. It highlighted Malaysia and India among emerging focal points.
Growth rates also show a reordering rather than a wholesale departure from established hubs. CBRE reported that live capacity grew 53% year on year in Johor and 37% in Melbourne in 2025, compared with around 6–8% in mature Singapore and Hong Kong SAR markets. These figures describe live-capacity growth in those markets, not the same thing as new investment, an announced project pipeline or a facility’s designed capacity.
Where is colocation capacity expanding?
The evidence is concentrated in particular metros and provider plans, not spread evenly across entire regions. The table distinguishes observed market measures from operator announcements and proposed projects.
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| Market | What has been reported | Stage and how to read it |
|---|---|---|
| Latin America | JLL reported 20% colocation inventory growth in 2025, a 9% average vacancy rate, and 42% of the colocation and hyperscale construction pipeline precommitted. Demand was concentrated in Brazil, Mexico, Chile and Colombia. | Market-level figures; they do not show that every announced project is operating or that growth is uniform across the region. |
| Johor, Malaysia | CBRE reported 53% year-on-year growth in live capacity in 2025. | Live-capacity growth in Johor, not a measure of Malaysia-wide capacity or investment. |
| Kuala Lumpur, Malaysia | NEXTDC announced that KL1 launched in May 2026, with 65 MW of designed IT capacity and a long-term investment described by the company as AUD$1 billion. | Operator-announced launch and design capacity; the investment figure is the company’s description, not a measure of annual spending or current utilization. |
| Jakarta, Indonesia | STT GDC announced a development pipeline exceeding 360 MW of AI-ready IT capacity across multiple campus phases. | Pipeline, not 360 MW of live capacity. Delivery depends on the project’s phases and execution. |
| Lagos, Nigeria | Equinix announced a planned US$22 million LG3 investment, a Q1 2026 target opening and an approximately US$100 million Africa investment plan. It described Lagos as strategically positioned for subsea connections. | The opening date was an announced target; the available announcement does not verify that LG3 opened on schedule. The connectivity rationale is the company’s claim. |
| Lagos and Delta states, Nigeria | USTDA funded a feasibility study for two proposed AI-ready facilities with INFRAGORA. | Study funding supports feasibility work, not construction. The release does not establish that the facilities were built or are operating. |
| Multiple African markets | Raxio announced US$100 million in IFC financing and said it would help double its colocation deployment within three years. | Announced financing and a company expansion plan, not a measured increase in completed capacity. |
JLL characterized 2025 as a record year for new Latin American inventory delivery, but its figures also show why regional headlines need context: demand and construction activity cluster in a few countries, and some pipeline capacity is already precommitted while the rest is not. A vacancy rate is a market snapshot, not a guarantee that a future facility will find customers.
What do investment announcements and forecasts actually tell you?
Capital figures can describe very different things. A facility investment, financing for a platform expansion, a multi-phase capacity pipeline and funding for a feasibility study are not interchangeable. Before treating an announcement as evidence of new supply, identify what the money supports and what stage the project has reached.
- Operating or launched: NEXTDC said KL1 launched in May 2026. Its 65 MW figure is designed IT capacity, not evidence that all of it is occupied or energized at full capacity.
- Provider pipeline: STT GDC’s Jakarta figure is a multi-phase development pipeline. It should not be added to live capacity as though already delivered.
- Planned opening: Equinix’s Q1 2026 date for LG3 was a target in its announcement. The announcement alone cannot establish current operating status.
- Feasibility study: USTDA’s support for proposed Nigerian sites is study funding, not a construction commitment.
- Platform financing: Raxio’s IFC financing supports an expansion plan; the announced goal to double deployment remains a company plan until capacity is completed and measured.
Forecasts require the same discipline. A 2025 report from the UNEP Copenhagen Climate Centre projected that developing regions would contribute at least 10–15% of the 10 GW of capacity it expected to break ground by 2025; it also projected roughly 400 MW in Africa by 2025 and 1.3 GW by 2027, and 5.2–6.5 GW in Southeast Asia by 2030. Those are report forecasts with specified horizons, not verified delivery totals. They should not be presented as observed outcomes.
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What should a buyer or investor compare before acting?
A headline growth rate or large megawatt figure is not enough to judge a market or an individual project. Compare like with like, and separate the market’s potential from the operator’s ability to deliver.
- Power and timing: Is capacity secured, and when can the site be energized? A power-advantaged location is useful only if the project can obtain the power it needs on schedule.
- Delivery stage: Is the number operating capacity, designed IT capacity, construction, a provider pipeline, a target date or a proposal? These measures answer different questions.
- Demand and maturity: Look at local customers, existing inventory, vacancy and precommitment alongside AI and cloud projections. Precommitment indicates some contracted demand, not that all planned capacity is sold.
- Connectivity and customer access: Assess network ecosystems, subsea links and proximity to users. Treat operator statements about a location’s advantages as claims to verify.
- Local hosting and regulation: Determine whether customers actually need workloads hosted locally and whether the facility satisfies the relevant rules. “Sovereign-ready” is not a substitute for legal analysis.
- Funding and execution: Establish whether announced capital is committed to construction, finances a broader platform expansion or pays for planning and feasibility alone.
For a personal-finance reader, market growth is context—not a return forecast. These announcements do not establish how a listed company’s shares, a data-center fund or any other investment will perform. Assess any investment using its own disclosures, financial risks, fees and fit with your circumstances rather than treating regional capacity growth as a buy signal.
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