Malaysia Data Center Market To Reach USD 3.73B By 2031, With 5,915 MW IT Capacity Arizton

(MENAFN- Market Press Release) September 3, 2026 5:01 am - According to recent research by Arizton, the Malaysia data center colocation market size was valued at USD 1,340 million in 2025 and is anticipated to reach USD 3,730 million by 2031, growing at a CAGR of 18.60% during the forecast period.

According to Arizton, Malaysia's data center colocation market was valued at USD 1.34 billion in 2025 and is expected to reach USD 3.73 billion by 2031 at an 18.60% CAGR. Malaysia has around 55 operational facilities across Cyberjaya, Johor, Iskandar Puteri, Kuala Lumpur, Bukit Jalil, and other locations, with Cyberjaya and Johor among the leading development destinations.

Operators are partnering with investment companies, financial institutions, real estate firms, and property developers to fund large-scale facilities, with partnerships, JVs, collaborations, and MoUs increasing.

AI-optimized facilities require substantial electricity, while power scarcity challenges APAC. Malaysia is supporting utilities and suppliers to strengthen availability, while companies develop energy projects for AI-ready facilities.

Key technology and industrial parks include 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 Growth and Cloud Adoption

Rapid digitalization is increasing demand for colocation, while operators acquire large land parcels for multi-facility campuses. Cloud adoption across finance, education, government, and other sectors is driving migration of non-critical workloads and wholesale colocation demand. ByteDance has been leasing wholesale space at Bridge Data Centres' MY06 facility in Sedenak since launch.

Operators prioritize renewable energy, rooftop solar, sustainable power, and efficient cooling.

Market Statistics
Colocation Revenue: USD 3.73 billion by 2031
CAGR: 18.60% during 2025–2031
Utilized White Floor Area: 24.89 million sq. feet by 2031
Utilized Racks: 609.3 thousand units by 2031
Utilized IT Power Capacity: 5,915 MW by 2031
Historic Years: 2022–2024
Base Year: 2025
Forecast Years: 2026–2031
Utilized Area and Racks

Utilized white floor area is expected to reach 24.89 million sq. feet by 2031. Cyberjaya remains the established hub, while Johor is emerging due to its proximity to Singapore, land availability, and power connectivity.

Utilized racks are expected to reach 609.3 thousand units by 2031. Colocation, cloud, and hyperscale expansion is increasing demand for high-density racks. 42U–52U racks enable higher compute density and efficient capacity expansion.

Recent Developments
June 2026: Racks Central secured around USD 1 billion from China-ASEAN Investment Cooperation Fund II for APAC expansion, including Malaysia.
June 2026: Tanco signed an MoU with China Mobile International for an approximately 50 MW Port Dickson data center.
June 2026: DayOne partnered with TNB to procure around 1.5 GW solar capacity and 2.2 GWh battery storage.
April 2026: Digital Edge DC acquired 49.7 acres in Johor from Crescendo Development for approximately USD 87 million for a data center.
December 2025: DPS Energy and VCI Energy planned a 250 MW solar project for AI data centers.
August 2025: Maybank signed a five-year USD 236.4 million contract with Microsoft for cloud and AI capabilities.
Key Market Trends
AI and Machine Learning

Malaysia is strengthening its AI ecosystem through government initiatives, strategic programs, foreign investment, AI adoption, talent development, and industry-academia collaboration.

In July 2025, YTL Corporation and NVIDIA agreed on around USD 2.36 billion for AI infrastructure, including an AI data center. AI adoption is expected to accelerate, increasing demand for AI-ready infrastructure and thermal management.

Liquid Cooling

Liquid cooling is gaining traction as Malaysian data centers increasingly support AI, HPC, and GPU-intensive workloads that generate more heat than conventional CPU systems. Malaysia's humid climate can also challenge traditional air cooling and increase energy consumption. Liquid cooling provides efficient heat dissipation and supports higher rack densities.

In June 2025, SK Innovation partnered with Bridge Data Centres through an MoU to deploy advanced liquid cooling at one of Bridge Data Centres' largest Malaysian facilities. Liquid cooling is becoming important for performance, energy efficiency, and sustainability.

Market Drivers
Supportive Government Environment

Government support is a key driver. Malaysia has introduced initiatives to simplify data center approvals, attract local and global investment, and promote sustainable development. 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, to strengthen and regulate the industry. This support is expected to attract new entrants and encourage expansion.

Cloud and Hyperscale Expansion

Malaysia's hyperscale and cloud infrastructure is expanding due to AI, machine learning, cloud computing, IoT, big data, robotics, smart cities, 5G, fiber-optic networks, and submarine cables.

In May 2026, Australia-based NEXTDC launched a large-scale Kuala Lumpur data center delivering approximately 65 MW across 196.4 thousand sq. feet, with more than 15 MW of IT power in its initial phase. Global cloud investments are expanding capacity and supporting AI infrastructure.

Industry Restraints
Skilled Workforce Shortage

Malaysia faces a shortage of skilled talent in data center management, cloud computing, and cybersecurity. Government agencies and industry players are responding through vocational training, upskilling, and workforce development.

Environmental and Land-Use Concerns

Malaysia's tropical climate, biodiversity, and stressed resources create challenges for energy- and water-intensive facilities. Greenfield projects require large land parcels and may compete with agricultural use and planning priorities. Non-compliant projects may face delays or opposition. Brownfield sites, efficient technologies, renewable energy, and environmental assessments can reduce these concerns.

Market Segmentation

The cloud & IT sector dominated colocation demand in 2025, accounting for around 77% of total demand. Enterprise cloud migration, hyperscale adoption, digitalization, cloud computing, AI, and machine learning are supporting its leadership.

Wholesale colocation is expected to contribute around 89% of market revenue by 2031, supported by wholesale leasing, build-to-suit deployments, hyperscale expansion, and AI-ready infrastructure. Migration of non-critical workloads to cloud platforms will further support demand.

In May 2026, Digital Decarbonization Solutions Platform (DDSP) planned a Johor data center campus offering around 40 MW of power capacity.

Report Coverage

The report covers colocation demand and supply, white floor area, IT power, racks, capacity/occupancy, market landscape, industry demand, sustainability, cloud operations, and submarine cables.

It covers 55 existing and 63 upcoming facilities across 4+ states, white floor area, IT load, 2025–2031 revenue, retail/wholesale revenue and pricing, market trends, opportunities, restraints, competitive share, and vendor analysis.

Key Questions

The research addresses facility counts, IT power capacity expected to be utilized by 2031, new entrants, and key market drivers.

About Arizton

Founded in 2017, Arizton Advisory & Intelligence provides data-driven market research and strategic consulting across Agriculture, Consumer Goods, Technology, Automotive, Healthcare, Data Centers, and Logistics. It helps clients anticipate trends and opportunities.

Source: Arizton Advisory & Intelligence

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