Malaysia Data Center Colocation Market Growth Insights – Utilized White Floor Area to Reach 24.89 Million Sq. Ft., Utilized Racks to Surpass 609.3 Thousand Units, and IT Power Capacity to Reach 5,915 MW by 2031.

Malaysia Data Center Colocation Market – Supply & Demand Analysis 2026-2031

MALAYSIA DATA CENTER COLOCATION MARKET SIZE

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. Malaysia is establishing itself as one of the most prominent locations for the development of colocation data centers, accounting for approximately 55 operational data centers spread across multiple locations like Cyberjaya, Johor, Iskandar Puteri, Kuala Lumpur, Bukit Jalil, and others. Cyberjaya and Johor are among the most attractive destinations for the development of colocation data centers in Malaysia.

In Malaysia, colocation operators are increasingly partnering with investment companies, financial institutions, real estate firms, and property developers to source funds to develop large-scale data centers to address the rising demand for colocation services across the nation. The partnerships, joint ventures, collaborations, and Memoranda of Understanding (MoUs) are rising significantly among the data center operators in the country to support data center infrastructure expansion.

The Artificial Intelligence (AI)-optimized data centers consume vast amounts of electricity to process complex workloads, and several nations across the APAC region are witnessing significant power scarcity challenges. To meet the power requirements of Artificial Intelligence-ready data centers in Malaysia, the government is supporting utility companies and electricity suppliers through various initiatives to help them produce sufficient electricity. Additionally, the companies are focusing on developing multiple energy projects to supply large amounts of electricity to power AI data centers across Malaysia.

Malaysia houses numerous technology and industrial parks that support data center operators to develop and operate their data centers efficiently. Some of the prominent technology parks in the country 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.

As the demand for colocation services is rising substantially across Malaysia owing to a rapid surge in digitalization and adoption of emerging technologies, the colocation companies are acquiring large parcels of land to develop multi-facility data center campuses to address the rising demand for colocation services across the nation.

Growing cloud adoption among enterprises across various sectors, including finance, education, government, and other sectors is leading the companies to migrate their non-critical digital workloads to the cloud platforms; the rising cloud migration among the businesses and enterprises is anticipated to accelerate the demand for wholesale colocation services across Malaysia over the forecast period as cloud companies require large-scale, wholesale colocation space to store the data from multiple users. ByteDance, the TikTok-owned company, has been leasing a wholesale colocation space at Bridge Data Centres’ MY06 data center in Sedenak since the facility launched.

Malaysia aims to achieve carbon neutrality by 2025, and therefore the nation is making substantial efforts to reduce carbon emissions and environmental impact. Consequently, data center operators are adopting various sustainability measures to enhance sustainability in their facility operations. The companies are prioritizing powering data centers with renewable energy, installing solar panels on data center roofs to support on-site renewable energy generation, and installing sustainable power and cooling architecture to minimize electricity and water consumption in data centers, thereby reducing their climate impact.

MALAYSIA DATA CENTER COLOCATION MARKET INSIGHTS BY UTILIZED AREA

The Malaysia data center colocation market by utilized area is expected to reach 24.89 million sq. feet by 2031. Cyberjaya remains the most established and preferred data center hub in Malaysia, supported by robust power infrastructure, connectivity, and government support. Johor is emerging as the next major data center hub, driven by its proximity to Singapore, land availability, and strong power connectivity.

The Malaysian government has also established several industrial and technology parks to support data center development within dedicated areas. Key locations 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.

MALAYSIA DATA CENTER COLOCATION MARKET INSIGHTS BY UTILIZED RACKS

The Indonesia data center colocation market by utilized racks is expected to reach 609.3 thousand units by 2031. The expansion of colocation, cloud, and hyperscale data centers is driving demand for standardized and high-density server racks to support growing compute workloads. The increasing adoption of 42U–52U racks enables higher compute density within limited floor space, supporting efficient capacity expansion and increasing rack utilization across Indonesia’s data center colocation market.

RECENT DEVELOPMENTS & NEWS IN THE MALAYSIA DATA CENTER COLOCATION MARKET

1. In June 2026, Racks Central, the Singapore-based data center operator, secured a fund of around $1 billion from the China-ASEAN Investment Cooperation Fund (CAF) II to expand its data center operations across multiple countries of the APAC region, including in Malaysia.
2. In June 2026, Tanco, the Malaysian property developer and investment company, signed a Memorandum of Understanding (MoU) with Chinese data center operator China Mobile International to develop around 50 MW data center in Port Dickson, Malaysia.
3. In June 2026, DayOne partnered with Tenaga Nasional Berhad (TNB), the Malaysian electricity company, to procure around 1.5 GW of solar capacity and approximately 2.2 GWh of battery energy storage to power DayOne’s data center operations.
4. In April 2026, Digital Edge DC, the data center operator, acquired around 49.7 acres of land in the Bandar Cemerlang Industrial Park (BCIP) in Johor, Malaysia, from a Malaysian real estate firm, Crescendo Development, for a value of around $87 million to develop a data center.
5. In December 2025, DPS Energy collaborated with VCI Energy to develop a solar project, which can produce around 250 MW of solar capacity to power AI data centers across Malaysia.
6. In August 2025, the Malaysian financial institution, namely Maybank, signed a five-year contract, worth around $236.4 million, with Microsoft to leverage Microsoft’s cloud and Artificial Intelligence capabilities, strengthening its digital transformation efforts.

MALAYSIA DATA CENTER COLOCATION MARKET TRENDS

Expansion of Artificial Intelligence & Machine Learning Workloads

Malaysia is strengthening its AI ecosystem through new government initiatives, strategic programs, and rising foreign investment in digital infrastructure. The supportive government policies are accelerating AI adoption in the country, while encouraging innovation, developing local talent, and promoting collaboration among industry, academic institutions, and technology providers. These initiatives are likely to enhance Malaysia’s position as one of the competitive regional hubs for AI development.

In July 2025, YTL Corporation, the Malaysian multinational company, collaborated with NVIDIA by signing an agreement to invest around $2.36 billion for the development of AI infrastructure in Malaysia. The investment will be used to fund the development of an AI data center in the country.

AI adoption is expected to accelerate over the next two to three years, driving demand for AI-ready data center infrastructure in Malaysia. The AI-ready data centers will contribute to the rise in demand for efficient thermal management solutions to handle large volumes of heat generated in AI-ready data centers during the forecast period.

Liquid Cooling Technology to become a Core Standard for Next Generation Data Center Development

The adoption of liquid cooling is gaining traction as Malaysia’s data centers increasingly support AI, HPC, and GPU-intensive workloads that produce higher heat loads than conventional CPU-based systems. Malaysia’s humid climate further challenges traditional air-cooling efficiency and increases energy consumption in data centers. Liquid cooling enables more efficient heat dissipation and supports higher rack densities.

In June 2025, the South Korean energy company SK Innovation partnered with Bridge Data Centres by signing a Memorandum of Understanding (MoU) to deploy an advanced liquid cooling solution at one of Bridge Data Centres' largest data centers in Malaysia.

As Malaysia strengthens its position as one of the leading AI and cloud computing hubs, liquid cooling is emerging as an important technology for improving performance, energy efficiency, and sustainability. The growing deployment of GPU-intensive infrastructure is encouraging data center operators to transition from conventional air-cooling systems to liquid-based solutions.

MALAYSIA DATA CENTER COLOCATION MARKET DRIVERS

Government Supportive Regulatory Environment

Government support plays a crucial role in Malaysia’s data center development. The government has introduced various initiatives and policy frameworks to simplify data center permit approvals, attract investments from local and global companies, and facilitate sustainable data center growth in Malaysia.

In March 2025, the Malaysian government established the Data Center Task Force (DCTF) to strengthen and regulate Malaysia's data center industry. Managed by the Minister of Investment, Trade and Industry and the Minister of Digital, it demonstrates Malaysia’s commitment to developing sustainable digital infrastructure.

With strong government-supported incentives and support schemes, Malaysia is anticipated to emerge as one of the major data center hubs, attracting new market entrants and encouraging existing operators to expand their data center operations to accelerate data center growth over the forecast period.

Surge in Cloud Regions & Hyperscale Data Center Development

Malaysia's hyperscale and cloud infrastructure is witnessing strong expansion, supported by increasing adoption of AI, machine learning, cloud computing, IoT, big data, robotics, and other advanced technologies. The development of smart cities, 5G deployment, and rising fiber-optic and submarine cable infrastructure are further strengthening the need for large-scale data centers in the country.

In May 2026, an Australia-based data center company, namely NEXTDC, launched a large-scale data center, delivering power capacity of approximately 65MW across a 196.4 thousand square feet area in Kuala Lumpur, Malaysia; the company delivered over 15MW of IT power capacity in its initial phase.

Rising investments from leading global cloud providers are strengthening Malaysia’s digital ecosystem by accelerating data center development, expanding cloud capacity, and supporting AI infrastructure growth, strengthening the country's position as one of the competitive hubs for digital infrastructure.

INDUSTRY RESTRAINTS

Scarcity of Skilled Workforce

Malaysia is experiencing a shortage of skilled talent in specialized areas such as data center management, cloud computing, and cybersecurity, creating challenges for data center operational efficiency, maintenance, and service reliability. To address this challenge, government agencies and industry players are investing in vocational training and upskilling programs to strengthen the digital workforce.

The rising government initiatives, industry collaborations, and investments by hyperscale operators in workforce development are helping Malaysia to address the data center sector’s talent shortage. New market entrants are creating employment opportunities and establishing training and upskilling programs to strengthen local workforce capabilities to support expansion of Malaysia’s data center industry.

Concerns Related to the Environment & Land Usage

Malaysia’s tropical climate, biodiversity, and increasingly stressed natural resources demonstrate that large energy- and water-intensive data centers can place additional pressure on local ecosystems and utility infrastructure. The development of greenfield data centers requires large land parcels for campus development, potentially competing with agricultural use and local planning priorities.

Data centers in Malaysia face societal concerns when construction activities fail to comply with local planning and safety guidelines. Projects that disrupt surrounding communities or do not meet regulatory requirements may experience delays, public opposition, or stop-work orders.

Environmental and land-use concerns can be minimized by prioritizing brownfield sites, adopting water and energy-efficient technologies, integrating renewable energy to power data center operations, and conducting environmental and land use assessments before committing to acquire land for data center development.

MALAYSIA DATA CENTER COLOCATION MARKET SEGMENTATION INSIGHTS

INSIGHTS BY COLOCATION DEMAND

In terms of colocation demand by industry, the cloud & IT sector dominated the market in 2025 with the largest share of Malaysia’s colocation demand, accounting for around 77% of the market’s total demand. This domination is led by a rapid surge in enterprise cloud migration, hyperscale cloud adoption, advancements in emerging technologies like cloud computing, artificial intelligence, machine learning, and others, along with rising enterprise digitalization initiatives.

INSIGHTS BY COLOCATION REVENUE

The wholesale colocation segment’s contribution is anticipated to increase to around 89% of the market’s revenue share by 2031, driven by the rapid surge in wholesale leasing activity, build-to-suit deployment models, and continuous hyperscale and AI-ready infrastructure deployments. This growth is further supported by the migration of non-critical enterprise workloads to cloud platforms across multiple industries, which is expected to drive strong demand for wholesale colocation services in Malaysia during the forecast period.

For example, in May 2026, Digital Decarbonization Solutions Platform (DDSP), an APAC-based data center and energy solutions provider, planned to develop a data center campus in Johor, Malaysia, offering around 40MW of power capacity.

WHAT'S INCLUDED?

1. A transparent research methodology and insights on the colocation demand and supply aspect of the market.
2. Market size available in terms of utilized white floor area, IT power capacity, and racks.
3. Market size available in terms of Core & Shell Vs Installed Vs Utilized IT Power Capacity, along with the occupancy%.
4. The study of the existing Malaysia data center market landscape, and insightful predictions about data center market size during the forecast period.
5. An analysis of the current and future colocation demand in Malaysia by several industries.
6. The study on sustainability status in Malaysia.
7. Analysis of current and future cloud operations in Malaysia.
8. The snapshot of upcoming submarine cables in Malaysia.
9. Snapshot of existing and upcoming third-party data center facilities in Malaysia.
10. Facilities Covered (Existing): 55
11. Facilities Identified (Upcoming): 63
12. Coverage: 4+ states
13. Existing vs. Upcoming (White Floor Area)
14. Existing vs. Upcoming (IT Load Capacity)
15. Data center colocation market in Malaysia.
16. Colocation Market Revenue & Forecast (2025-2031)
17. Retail Colocation Revenue (2025-2031)
18. Wholesale Colocation Revenue (2025-2031)
19. Retail Colocation Pricing along with Addons
20. Wholesale Colocation Pricing along with the pricing trends.
21. An analysis of the latest trends, potential opportunities, growth restraints, and prospects for the colocation data center industry in Malaysia.
22. Competitive landscape including market share analysis by the colocation operators based on IT power capacity and revenue.
23. Vendor landscape of each existing and upcoming colocation operator based on existing/ upcoming count of data centers, white floor area, IT power capacity, and data center location.

TARGET AUDIENCE

1. Data center Real Estate Investment Trusts (REIT)
2. Data center Construction Contractors
3. Data center Infrastructure Providers
4. New Entrants
5. Consultants/Consultancies/Advisory Firms
6. Corporate and Government Agencies

RESEARCH METHODOLOGY

1. Primary Research: Interviews/interactions with data center developers, colocation providers, contractors, system integrators, and infrastructure providers.
2. Secondary Research: Analysis of annual reports, financial filings, press releases, data sheets, white papers, industry blogs, and tender documents.
3. Historical Period: 2022–2024
4. Base Year: 2025
5. Forecast Period: 2026–2031
6. Approach: Market data is validated using primary industry inputs and secondary sources, with 2025 representing actual values and 2026–2031 representing forecast estimates.