Johor stays Malaysia’s data centre powerhouse as AI demand surges, BMI says

Johor remains Malaysia’s largest data centre hub as the industry shifts towards artificial intelligence-focused facilities, although electricity supply constraints pose challenges to further expansion. — AFP pic

First Published: Friday, 09 Oct 2026 11:34 AM MYT

KUALA LUMPUR, Oct 9 — Malaysia’s data centre market is shifting towards higher-value, artificial intelligence (AI)-focused deployments, with Johor remaining the country’s dominant hub despite growing power constraints.

BMI, a unit of Fitch Solutions, said Malaysia had 125 data centre facilities, with 925.6 megawatts (MW) of live capacity, 2.0 gigawatts (GW) under construction and a planned pipeline of 3.1 GW, largely concentrated in Johor.

The market’s initial growth was driven by its proximity to supply-constrained Singapore, but demand has since broadened, supported by hyperscaler commitments, local enterprise workloads, cloud adoption and policy initiatives under the MyDigital blueprint.

BMI said that since 2024, large AI-focused proposals had largely secured approvals, pushing the market towards higher-value and capital-intensive deployments dominated by private-equity-backed platforms such as DayOne, AirTrunk, Bridge DC and Yondr.

“Power remains the binding constraint, however, with grid bottlenecks, new tariffs above 100 MW and stricter sustainability screening raising execution risk and encouraging diversification into Thailand and Vietnam,” it said in a note today.

On supply, BMI said Johor would remain Malaysia’s dominant data centre hub, with a combined pipeline of 4.1 GW, ahead of other key submarkets such as Kuala Lumpur and Cyberjaya, which have 104 MW and 850 MW, respectively.

It said Singapore’s limited supply and rising lease prices had encouraged operators to expand into neighbouring markets, including Johor and Batam, Indonesia, to meet regional demand.

Looking ahead, BMI expects more data centre platforms operating in Asia to consolidate their positions in established hubs such as Johor while diversifying into other markets to mitigate country-specific risks.

On demand, it added that Singapore remains an important driver, particularly for Johor, given the close economic relationship and the ability of Malaysian facilities to serve regional customers. — Bernama