Executive Summary
The infrastructure services market in APAC continues to perform well in an environment that is constantly evolving, with multiple moving parts. Last quarter, we focused closely on the impact of DeepSeek and the hyperscale pullbacks from infrastructure resource commitments. A spirited debate across the sector emerged, but indications are that things are stable and the hyperscalers are simply working through the ups and downs of an imperfect process. More than one hyperscaler went on the record and confirmed the pullbacks were more routine capacity management than anything else, and we will take them at their word. Hyperscale growth is healthy and accelerating, leasing has not had a material drop-off and CapEx investment levels are steady and even increasing. Overall, things seem to have settled in and the sector is pushing forward.
For APAC, there is still plenty to come. The pieces that will drive a long-term growth wave continue to come together. Land and energy assembly is picking up pace in core markets, while emerging markets are seeing intensifying competition as interest from operating groups and capital wanting to get in front of the next opportunity is at all time highs. Young and emerging markets have unique dynamics that distinguish them from what is going on in places like Australia, Japan and South Korea. In these more established markets, energy is increasingly constrained and inventory is tighter, while pricing has pushed upward. Emerging markets in the region have seen pricing drop given the widespread competition, while the size of the market and local dynamics mean the land and energy constraints are less of a barrier.
While hyperscale continues to be the growth engine of the region, AI is adding a new wrinkle that has not fully translated into tangible demand, uptake and growth on the ground. The region is somewhere early in that progression, but there is little question that things will start to happen. AI-oriented infrastructure is still developing at an early stage in the US and Europe, but it is set to come to APAC and there are signs that this is on the horizon. Just like hyperscale cloud first established itself in the US and Europe, before landing in APAC, so too will the AI infrastructure wave. The difference this time around is that local markets in APAC are more established and mature, putting it in a position to propel forward faster and more aggressively. The foundation that is in place now, that did not exist when hyperscale came to the region, ensures a different pace of development and ultimately, a more vibrant outcome.
This report takes a closer look at the most noteworthy themes and developments that took place in the infrastructure services market in APAC in 2Q25. It is a regional supplement to Structure Research’s other quarterly update reports.
