AI growth transforms Asian data centres into hubs for loan deals

Advancements in artificial intelligence are driving a surge in investments for data centers across Asia, leading to numerous record breaking loans and creating a pipeline with additional potential agreements. Within a week, two leading Asian data centers obtained their biggest loans, with a portion designated for the growth of their operations in Malaysia, which is emerging as a center for these facilities.

The agreements highlight the sector's attractiveness in drawing various investors — including banks and real estate professionals — as the AI surge increases demand. They also highlight the extent to which Asia has transformed into a data center hotspot, with demand projected to grow by approximately 32 percent annually until 2028, based on data from real estate services firm Cushman and Wakefield, surpassing the US's anticipated growth of 18 percent. While the US tariff policy might be an unpredictable factor for the industry.

“The surge in demand for data center capacity has piqued the interest of an ever-growing diverse pool of capital investors and providers across Asia Pacific,” said Yemi Tepe, a partner at law firm Morrison Foerster, who has worked on tech-related financial transactions. Banks have historically been the main source of funding for large scale projects, but the emergence of private credit and infrastructure funds have expanded financing avenues, said Tepe. 

More potential deals in the Asia Pacific region are anticipated. A Singapore operating entity of Australia’s Firmus Technologies is looking to secure a private loan of $120 million, while India’s Yotta Data Services Pvt. is negotiating with private credit funds to raise approximately $500 million for its data center facilities.