HCMC among top data center destinations in land costs
Vietnam’s Ho Chi Minh City is in the top 10 group for selection in the Land Price category in global property services firm Cushman & Wakefield’s latest annual report on data center developments.
The report ranks major data center markets around the world based on 13 categories, including market size, fiber connectivity, power cost, and environmental risks to determine the top overall markets as well as the top-performing markets in each category.
According to the firm’s Q4/2022 HCMC market beat report, the average rental price in the southern Vietnamese economic hub was $159 per sqm for the entire lease cycle, up 3% quarter-on-quarter and 10% year-on-year.
Vietnam may be a frontier data center market at this juncture but has numerous fundamentals that would suggest great potential for development going forward, Cushman & Wakefield Vietnam said on Thursday.
Vietnam currently has about 70% internet penetration, with an estimated 29 million people yet to get online. Over 48% of Vietnam’s capacity is located in HCMC.
South of HCMC is a preferred destination for data centers, especially for cloud service platform providers, due to latency issues and manpower, the annual report says. Increasing land prices, limited land availability, especially for hyperscale, and limited current or future power supply in HCMC, are pushing new data center developments to nearby Binh Duong or Dong Nai provinces.
In the southern economic hub, Vietnam’s CMC Telecom opened its Tan Thuan Data Center last August. The facility was designed by B-Barcelona of Singapore. The facility covers more than 1.3 hectares and was 30% preleased at the launch time, according to CMC.
Australian Edge Centres has expanded to Asia with the launch of its first data center, EC51, in HCMC in collaboration with Vietnam National University HCMC. They also have plans for an additional edge site in the city’s District 1.
Hong Kong-headquartered GAW Capital in June 2022 acquired a greenfield plot in HCMC’s Saigon Hi-Tech Park (SHTP) to develop it into a data center covering almost two hectares with an IT capacity of 20 megawatts.
An artist’s impression of Gaw Capital’s data center project in Saigon Hi-Tech Park, HCMC. Photo courtesy of the firm.
NTT Global Data Centers India, better known as NTT, is partnering with Vietnamese firm Quang Dung Technology (QD.Tek) to develop a new data center in SHTP that will support 6 MW of IT capacity, with an estimated launch date in 2024.
NTT operates a data center in Hanoi that opened in 2009 in partnership with the state-run Vietnam Posts & Telecommunications Group (VNPT). Meanwhile, QD.Tek, established in 2004, is part of food manufacturer GreenFeed Group.
Vietnamese telecom giant Viettel has also announced plans to build a new data center in HCMC with a total of $261 million in investment, described as the nation’s largest. The outlying districts of Cu Chi and Hoc Mon have been selected to house the project, but the state-run group has not finalized the location. Meanwhile, its IT infrastructure developer Viettel IDC secured a loan of VND400 billion ($17 million) for green financing from HSBC Vietnam last August to build a data center in Hanoi.
VNG Data Center in District 7, Ho Chi Minh City. Photo courtesy of VNG.
VNG, another Vietnamese heavyweight, launched its tier-III VNG Data Center in Tan Thuan Export Processing Zone, District 7, HCMC in mid-December. The zone is also home to CMC Telecom’s data center launched in August.
Vietnam offers huge opportunities for data center developers amid rising demand, especially from foreign customers, Nguyen Thanh Danh, chief operation officer of VNG Cloud under VNG, told The Investor.
“There will be huge opportunities for infrastructure as a service, or IaaS, platform as a service (PaaS), and software as a service (SaaS) businesses, with data centers and cloud computing playing a great role in IaaS,” he said.
Vivek Dahiya, head of Cushman & Wakefield’s data center advisory team, Asia Pacific, said interest and investment in the region would continue at pace as the sector evolved.
“We are seeing significant investment and interest in Bangkok, Ho Chi Minh City, Hyderabad, Johor and Manila and we expect this to continue, along with interest in other primary and secondary markets in the region,” Dahiya said.
VNG Cloud’s COO Danh told The Investor that despite being facilitated by the Vietnamese government for a long time, digital transformation in both the public and private sectors has not taken place as quickly as expected compared to other countries in the region.
“However, the process has accelerated recently as organizations and enterprises have become more aware of the benefits of digital transformation. From 2023, the market is predicted to make strong breakthroughs despite economic difficulties,” he said.
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