Philippines offers cheapest cost for data centers in AsPac

MANILA, Philippines — The Philippines posted the cheapest construction costs for data centers in AsiaPacific with a $4.59 per watt cost, according to a report by a global real estate consultancy.

In its recently launched APAC data center cost guide, Cushman & Wakefield said regional medium cost per megawatt (MW) in the Philippines stood at only $4.59 million compared to Taiwan’s $6.15 million and Vietnam’s $6.7 million per MW.

In contrast, Japan registered the highest cost per MW in the region at $12.73 million.

This was followed by Singapore and South Korea with cost per MW of $11.2 million and $9.2 million, respectively.

“AsiaPacific today is a development-developers’ market, with existing participation by most large groups. Private products created during the development stage by these groups have often traded to a public long-term hold, such as a REIT,” Cushman & Wakefield AsiaPacific head of capital markets Gordon Marsden said.

“While the sector enjoys tailwinds, whether investment volumes will be enough to propel the sector into the mainstream remains to be seen. Assuming between three percent and eight percent of the stock to be completed over the next decade becomes available as individual asset sales or portfolio sales unencumbered from an operational exposure or some form of pre-emption, and depending on the criteria for evaluation, if possibly could,” Marsden added.

In the same report, Cushman & Wakefield ranked Metro Manila as the eighth market with the most expensive land costs for data centers in the region, registering a medium average cost of $3,588 per square meter (sq m).

In addition, Clark also ranked 36th in the index with land cost at $136 per sq. m.

Apart from Metro Manila, provincial locations, particularly Laguna, Batangas, Cavite also ranked 27th in the regional land cost index with medium average cost at $694 per sq. m.

Singapore ranked first in terms of the most expensive land costs at $11,573 per sq.m. This was followed by South Korean cities Seoul and Busan with land costs of $10,525 and $8,865 per sq.m., respectively.

“As a whole, Asia Pacific is attractive to investors for its comparatively low land and development costs and for the growth potential in both developed and emerging markets,” Cushman & Wakefield said.

Although supply chain disruption and supply/demand imbalance for both labor and materials remain in recovery, raw material prices, energy and transport costs remain at an all-time high and continue to contribute toward record construction costs,” it added.

Overall, Cushman and Wakefield said AsiaPacific has seen an average increase of 4.9 percent on 2022 construction pricing.