In the age of expanding e-commerce and cloud computing, the Philippines data center industry is experiencing rapid expansion: Ken Research

1. Philippines Data Center Market is being driven by internet users and booming industrial real estate portfolio.

Co-locators of data centers and investors are more than ready to welcome data centers in the Philippines. Philippines offers enough of available land for the development of data centers and a thriving industrial real estate portfolio. Additionally, as a result of the pandemic shift, regional demand for data centers is rising tremendously, especially as smart city trends, e-commerce, cashless transactions, the use of cloud technology, and the desire for faster internet all gain traction. Another factor driving the expansion of data centers in the Philippines is cybersecurity worries. As more and more data are generated, there is an increasing requirement for data to be securely stored. Another benefit is that there are 76 Mn internet users in the nation who log on a daily basis for an average of more than ten hours. The country’s data usage now has a strong foundation thanks to this.

2. Inadequate power infrastructure, high power costs, and a lack of suitable properties are just a few of the obstacles the Philippines data center market must overcome.

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According to the Philippine Department of Energy (DOE), electricity in the Philippines averages $0.15/kWh as of June 2021. While the capital region is the most preferred location for data center operators, there is a constraint in available supply. Apart from this, most office space is built for traditional and BPO occupiers. Meanwhile, most existing warehouse & industrial property is geared to manufacturing and logistics firms, making redevelopment costly. Furthermore, to make things more challenging the country’s median broadband speed of 60 Mbps is still slower compared to other SEA countries. Improving internet connectivity will be crucial in boosting the Philippines viability as a data center hub.

3. In the upcoming years, demand is projected to increase due to government initiatives, the emergence of new business models, and advancements in 5G and 6G technology.

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The Philippine government has planned to serve as a significant demand source for data. The government’s Cloud First policy promotes cloud computing as the preferred technology to manage and deliver government services. The said policy covers the executive branch of the national government, GOCCs, state universities and colleges, LGUs and vendors servicing the government, while the Congress, Judiciary, independent constitutional commissions, and the Office of the Ombudsman are all encouraged to adopt it. With that new business models are likely to emerge including colocation services, pay-per-use utility model, built to suit, etc. Additionally, the 5G and 6G technology will also push the adoption of IOT-enabled products in the Philippines market. The market for big data and IOT is still in the nascent stage of growth.