Leechiu: Internet boom drives “insane” level of expansion in PH

David Leechiu. CONTRIBUTED PHOTO

MANILA, Philippines—Shifting geopolitics and booming demand for internet services are pushing data center companies to build an enormous amount of capacity in the Philippines over the next 36 months, property market veteran David Leechiu said on Monday (March 28).

“There is an incredible amount of data center capital that wants to transact here,” Leechiu, CEO of Leechiu Property Consultants, told reporters at a briefing on real estate trends.

“The exact number is 38 companies. The amount of mega wattage they are talking about is kind of insane,” he said.

Data centers are critical for businesses requiring data storage and cloud services. These are also notoriously power-intensive facilities, their capacity is thus measured in energy usage instead of land area.

The Philippine data center market remains underserved as the country was once avoided by foreign companies given its reputation for political instability and vulnerability to natural calamities.

Leechiu said foreign investors are taking another look not only because of the country’s growing and internet savvy population but also the changing world order characterized by China’s rising influence in the region.

“Philippines is one of the most solid Western-influenced countries and therefore [Western powers are thinking] we should move some storage capacity out of certain countries into the Philippines or make a Philippine location a redundancy program to complement what they have in the region,” Leechiu said.

Major telecommunications providers PLDT Inc. and Globe Telecom revealed plans to vastly expand their data center capacity by 100-MW each while fiber internet giant Converge ICT Solutions announced it would build more data centers.

Earlier, Alibaba Cloud, owned by Chinese billionaire Jack Ma, announced it would build its first data center in the country while Singapore’s SpaceDC said it would put up a 72-MW data center campus in Cainta, Rizal.

The recent investment spike from new and existing data center operators ensures a robust pipeline of facilities coming online in the next 24 to 36 months.

But Leechiu said there was no guarantee demand would be that large.

“Whether the Philippines is going to absorb all that capacity is something that we will have to wait and see,” he said.

“I am just concerned that 38 data centers want to establish a physical operation here might be too big for the demand that’s actually going to be here by the time the data centers are completed,” Leechiu added.

TSB