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Q4 2022: APAC Infrastructure Quarterly Report

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Executive Summary

The infrastructure services market in APAC continues to navigate and push through a complicated landscape. Weak macroeconomic conditions have persisted and the region faces unique challenges around geography, labour, supply chains and operating infrastructure. This has opened the door for hyperscale self-builds and hybrid models such as the build-to-suit (BTS). Demand for colocation has taken a hit as a result, but there is an offsetting dynamic coming from the likes of emerging hyperscalers like ByteDance and the subscale tier, which is expanding in the region more aggressively. This is a market that is expected to continue growing, with consistent demand for data centre colocation services.

There are other positive signs that point to a healthy long-term demand profile. The government sector has been strong in Australia and Singapore, while other countries in the region are increasingly open to migrating from traditional infrastructure to public cloud and outsourced data centres. Meanwhile, managed public cloud growth shows that end users are not just using cloud, but expanding their usage with uptake in tools and services. Optimisation and cost reduction is a part of the current environment, but long-term it is about validating the value proposition of cloud.

As the market goes through a turbulent period, there are other areas that present potential upside. China has started to open up and that should lead to forward momentum. Nothing tangible has come of this just yet, but in the coming quarters there should be some signs. New markets like Thailand, Vietnam and the Philippines, that are going to see significant hyperscale growth, are also positive indicators.

It may take time for many for the moving parts within the sector to sort itself out, but it is a good bet that it will reach that end game favourably.

This report takes a closer look at the most noteworthy themes and developments that took place in the infrastructure services market in 4Q22. It is a regional supplement to Structure Research’s other quarterly update reports