Johor emerges as Asia Pacific's third-largest data center hub

Malaysia's data center sector is solidifying its position as a regional powerhouse, with Johor emerging as a leading hub, according to the Knight Frank Data Centre Atlas 2026. The southern state has achieved a regional first by recording 8,542 Megawatts (MW) of incoming capacity and boasting the lowest combined operational vacancy rate at a mere 0.7 percent. This performance significantly outpaces competitors like Singapore (4.9 percent), Bangkok (23.3 percent), and Jakarta (20.5 percent), underscoring a robust demand for data center assets.

The overall market value in Johor has surged to US$39.11 billion (RM159.9 billion), placing it third in Asia Pacific for direct IT capacity with 1,110 MW, trailing only Tokyo and Singapore. This growth is attributed to Malaysia's stable policies and secure investment environment, which are attracting investors reconsidering their risk exposure amidst global geopolitical instability. Keith Ooi, Group Managing Director of Knight Frank Malaysia, highlighted that these factors are driving Malaysia's emergence as a regional data center hub.

Johor, once considered a secondary market to Singapore, has transformed into a fully institutionalized market, according to Justin Chee, Executive Director of Valuation and Advisory at Knight Frank. The state recorded RM1.0 billion in data center transactions in the first half of 2026, covering 66.21 hectares, including a RM12.7 billion investment commitment from an Australian hyperscaler for two new data centers totaling 280MW. Meanwhile, the Klang Valley also saw healthy demand with RM1.4 billion in transactions across 293.1 acres, supported by the RM160.0 million Digital Future Action Plan 2026-2030 and a policy mandating at least 30 percent local content.

Investment interest is now expanding to other states, with proposed AI data center projects worth US$1.1 billion (RM4.1 billion) and RM9.0 billion investments in Melaka, alongside a RM1.0 billion AI park development in Perak. This widespread expansion signals a growing confidence in Malaysia's data center infrastructure and its potential to attract significant foreign investment.