Building Tomorrow’s Infrastructure with ESR Data Centres

Just as e-commerce transformed logistics a decade ago, Artificial Intelligence (AI) is set to do the same to the data centre industry. Global data centre capacity is expected to double in the next five years, with APAC growing at a 20% CAGR to 24,800 MW by 2028, supporting over US$500bn in investments. 

Across the Asia-Pacific region, one company has positioned itself at the forefront of this market: real asset manager ESR Group, which is one of the largest listed real estate investment managers globally and more specifically, the ESR Data Centres team. The company uses its expertise in logistics and industrial real estate development to meet the needs of cloud providers, hyperscalers and enterprises. ESR raised over US$2bn from investors, including some of the world’s largest sovereign wealth and pension funds, to develop greenfield and brownfield data centre projects across the APAC region. Now, ESR has more than US$154bn in assets under management and more than 2,000 employees across the region. Clearly the company has the scale, local knowledge and resources to execute complex data centre projects.

Diarmid Massey, CEO of Data Centres, ESR Group, enjoys building data centres and rolling out the infrastructure needed for the connectivity of the future.

"There's an obvious synergy between building logistics, tech parks and using that skill set and ability to build data centres," Diarmid explains. "It comes back to the key strengths of the company -  sourcing of land and development opportunities, permitting, planning and working with local contractors."

The company is currently executing on an initial pipeline of over 575 megawatts of committed data centre sites, with plans to expand to over two gigawatts across approximately 18 projects. Key markets of focus include Australia, Japan, Korea, India and Malaysia.

Cloud and AI growth at ESR Data Centres

The data centre market in the APAC region is influenced by both global and local factors. One of the key comparisons is the US market, which has grown from 8GW in 2020 to 17GW in 2024 and is projected to reach 30GW by 2030. APAC, currently at 10GW, is expected to follow a similar growth trajectory. This expansion is driven by rising demand for cloud services, with public cloud revenue set to grow at a 13.8% CAGR, from US$526bn in 2023, to US$882bn by 2027.

The global colocation market is also expanding at an 11.3% CAGR, while hyperscaler demand is growing even faster, at 20% CAGR from 2021 to 2026. APAC is seeing strong demand signals, leading to a ‘land grab’ by hyperscalers, particularly in markets like Bangkok, Seoul, Japan and India.

Key technological shifts are driving these changes, including the move from CPUs to GPUs and specialised processors, like Neural or Language Processing Units. AI is transitioning from legacy systems to the cloud, along with advancements like Large Language Models evolving into more application-specific models and the eventual development of Artificial General Intelligence (AGI). As 5G moves towards 6G by 2028, more immersive technologies like VR/AR will increase bandwidth needs.

Capacity hybridisation is also becoming more prominent, with core cloud and AI/ML workloads being handled in the same assets. Hyperscalers are utilising colocation for smaller, specific deployments and speculative land purchases of 100-150MW are being made by major players.

"We see significant growth in the cloud market in Asia. We're not pinning all of our hopes on AI and waiting for the AI wave to engulf Asia," Diarmid says. "We see that there is significant cloud build out in the core markets, but not just the tier one markets such as Japan, Korea and Australia, but also the emerging markets, such as Malaysia, Thailand and Indonesia."

The rise of AI workloads is impacting the logistics of data centres, according to Diarmid. While traditional cloud services require low latency and proximity to population centres, AI applications can often be located in more remote areas, where land and clean energy are more accessible.

"As AI is coming to the region, we're seeing that complementing the growth in the tier one markets, but it's also increasing the growth rates of emerging markets where perhaps land and power prices are more affordable," Diarmid explains. "The AI workloads, which are less latency dependent, are leading to the build out of newer regions and newer areas."

This trend is opening up opportunities for ESR to leverage its pan-Asian presence and extensive land bank. The company can repurpose existing logistics sites or develop new campuses that combine data centres with other commercial real estate.

ESR: A competitive edge with a sustainable core 

While competition in the data centre sector is intensifying, ESR has several key advantages. Access to land and power are critical differentiators, but Diarmid emphasises that ESR's local expertise and deep relationships with contractors across the region give it an edge in project execution. 

"An organisation the size of ESR, which is regularly building across the region, has deeper embedded relationships with general contractors and the construction industry in each market," he notes. "We're able to leverage that to bring construction resources into projects faster than organisations that may only be building one data centre per country or per market."

ESR is pursuing a flexible business model, where it can be both a developer-investor and a capital partner for operators and hyperscale customers. This allows the company to tailor its approach to each market and customer need.

"We'll continue to have a flexible business model which allows us to be the developer and partner of choice for operators and customers who want the skills and ability that the ESR Data Centre team can bring to support them in new markets or just expanding in their existing markets," Diarmid says.

ESR is committed to its ambitious sustainability goals, designing and delivering for LEED Gold certification across all assets and achieving net zero data centres powered by 100% renewable energy by 2040, with an interim target of 75% by 2030.

ESR’s strategy is built on three pillars: 

• Sustainable construction

• Operational efficiency

• Renewable energy

These principles – aligned with the ESR Group ESG framework – guide the company in developing Green Data Centres and are integrated throughout every project phase.

“During site selection, we avoid sensitive areas, such as disaster-prone zones or habitats for endangered species. We conduct climate risk assessments to ensure resilience against climate change and design mitigation measures as needed. We also explore retrofitting existing buildings into data centres to significantly reduce embodied carbon,” Diarmid explains. “In design and construction, we incorporate low-carbon solutions like free cooling and waste heat reuse where possible. We also prioritise energy- and water-efficient technologies, use low-carbon materials and have policies to monitor and reduce construction waste and pollution.”

During operation, ESR implements policies for sustainable management and retrofitting, continuously optimising Power Usage Effectiveness (PUE) and Water Usage Effectiveness (WUE) to enhance efficiency.

"We prioritise the use of best-in-class energy efficient MEP systems, targeting LEED Gold certification and install a comprehensive energy monitoring scheme to optimise the performance during operation,” explains Cindy Nguyen, who leads sustainability initiatives for ESR Data Centres business. “We are also working closely with our JV partners and customers to improve the IT and MEP equipment efficiency."

Innovative approaches to sustainability are being explored across ESR's portfolio and water consumption is a key focus area.

“In our design, we maximise the cycles of concentration in cooling towers, which means recycling water multiple times within the cooling system before discharge to reduce overall water use. Our water metering scheme also allows for monitoring and optimisation of water consumption during operation. In areas facing water scarcity, we adopt water-free cooling systems to prioritise the essential needs of local communities while ensuring the operational resilience of our data centres.”

The use of liquid cooling to support high density workloads is also developing rapidly in APAC. 

“There are a range of products from 40kW per rack to 120kW per rack that are leveraging liquid cooling. Cold plate liquid cooling is the most common solution that we are seeing in the market. But the chilled water temperatures and weights specified vary considerably between workloads and suppliers,” explains Richard Mills, Head of Design and Development, Data Centres, ESR Group. 

Depending on customer requirements, ESR can make considerable improvements in energy efficiency, cooling much of the workload without the need for chillers even in tropical climates such as Singapore and Malaysia. 

“As the market is still developing, we also need to maintain flexibility to ensure that we can support a full range of products and requirements for our customers. The ease of capturing waste heat improves greatly if we can get this liquid cooling in, as we start to run the data halls and the water warmer," Richard notes. "That's a better-quality heat. It's more economical, more efficient to reuse those warmer temperatures off the liquid cooling in particular."

ESR sees an opportunity to create integrated energy ecosystems within its business parks across Asia. By co-locating data centres with other commercial buildings, the company can implement district heating systems that utilise waste heat from the data centres.

"It gives us both efficiency for the data centre and obviously it also gives our customers a relatively cheap and green source of heating for their facilities on our business parks," Richard explains.

ESR’s innovative solutions for renewable energy

The entire data centre industry is trying to overcome one critical challenge – supporting the digital economy while reducing environmental impact. Considering the demand for data, there is a need for the industry to use multiple sources of clean energy to be able to achieve 100% renewable energy use goals.

“At ESR, we combine on-site renewable energy generation with various other strategies, including uplifting the energy efficiency of our assets and choosing locations with access to renewable energy and/or low-carbon energy sources,” says Diarmid. “For instance, we can use solar-generated electricity from the rooftop solar panels on our neighbouring logistics facilities, as well as collaborate with partners to develop solar and wind farms.”

In addition, ESR is actively exploring other off-site power generation options including renewable energy Power Purchase Agreements (PPAs), which cover predominantly solar and wind but could also include other low-carbon sources such as biofuel, geothermal, hydro and nuclear energy.

With its first data centre now operational in Osaka, Japan, ESR is ready for the next challenge. The company is actively developing sites across its target markets and expects to announce new partnerships and customer wins in the coming months.

"You'll see some exciting stuff from us,” Diarmid shares. “We're going to continue to follow the needs of our customers. We'll follow the demand of the industry and where we can, we will continue to innovate with our solutions for renewables and our minimisation of carbon and deliverables against those high targets we've set ourselves that we expect to deliver both for our customers and for the planet." 

With its pan-Asian presence, financial strength and commitment to net zero, ESR is set to be a major force in shaping the region's data centre landscape for tomorrow's connected world.

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