The Rise of Emerging Markets in the Data Center Race
The next wave of AI infrastructure will not be built in Silicon Valley or Frankfurt it will rise in São Paulo, Nairobi, and Johor Bahru.
Welcome to Global Data Center Hub. Join investors, operators, and innovators reading to stay ahead of the latest trends in the data center sector in developed and emerging markets globally.
This article is the 12th article in the series: From Servers to Sovereign AI: A Free 18-Lesson Guide to Mastering the Data Center Industry
The new growth frontier for global compute
Data centers have long been concentrated in a few developed markets – the United States alone hosts nearly half of the world’s facilities.
But this landscape is starting to shift as countries like India, Brazil, and Kenya ramp up investments to position themselves as regional hub.
Emerging markets matter now because they represent the next frontier of growth for digital infrastructure.
As demand for cloud services and AI computing soars worldwide, these economies recognize that local data centers are essential for competitiveness and sovereignty.
Governments from Singapore to Kenya are racing to attract data center projects, offering tax breaks and fast-track permits to anchor future digital growth.
In short, the global data center race can no longer ignore the vast user bases and untapped demand in emerging economies.
The question is not if these markets will become major players, but how quickly and on what terms.
Three regions redefining where digital infrastructure gets built
Latin America: This region is experiencing a surge in data center investment and capacity.
The Latin American data center market is projected to nearly double from around $5 billion in 2023 to almost $10 billion by 2029.
Brazil, Mexico, and Chile are leading the expansion, with dozens of new facilities under construction.
These countries benefit from large populations coming online and relatively stable economies that are attracting cloud providers.
Even second-tier markets like Colombia and Peru are emerging as tech hubs as connectivity improves.
The result is a rapid closing of the gap: after years of relying on servers in the US or Europe, Latin America is building a home-grown digital backbone. Local companies gain lower latency and data sovereignty, while global operators view the region as a high-growth opportunity.
Africa: Africa is often cited as the last digital frontier and the data center sector reflects both the challenges and opportunities on the continent.
Today, Africa accounts for less than 1% of the world’s data center capacity.
Industry estimates indicate the continent needs at least 1,000 MW of new capacity across 700 additional facilities to meet booming demand.
This underscores how under-served the market is, but also how much growth is possible.
South Africa remains the primary hub (housing major cloud regions for AWS, Microsoft Azure, and Google Cloud), yet new investments are spreading north and west.
In Nigeria and Kenya, the landing of high-capacity submarine cables (such as Google’s Equiano and the 2Africa cable) has dramatically improved connectivity.
As a result, global and local players are partnering to build data centers in Lagos, Nairobi, Accra and beyond.
Governments across Africa are also emphasizing digital infrastructure in national plans, hoping to leapfrog into the digital economy.
The African data center race is just beginning with foreign capital, like Middle Eastern sovereign funds, and pan-African firms pouring in to build capacity on a continent of over a billion people.
Southeast Asia: In Southeast Asia, demand for data centers is rising beyond the traditional hub of Singapore.
Massive populations and fast-growing internet economies in countries like Indonesia, Malaysia, Thailand, and Vietnam are driving a wave of new construction. Jakarta, Indonesia (a metro of over 30 million people) is now one of the fastest-growing colocation markets globally.
Both domestic operators (e.g. DCI Indonesia, ST Telemedia) and global firms (Equinix, Google, Amazon) are adding facilities to keep up with demand.
Malaysia has positioned itself as an alternative hub with cheaper land and power; major cloud providers have announced new regional data centers in Kuala Lumpur to serve Southeast Asia.
Likewise, Bangkok and Manila are attracting investments as their digital economies mature.
A common thread across ASEAN is the push for data sovereignty, governments are enacting localization laws that require data to be stored within national borders, which in turn mandates building local data centers.
Combined with a young, mobile-first user base and new fiber-optic cable landings boosting bandwidth, Southeast Asia’s emerging markets are quickly becoming essential pieces of the global data center map.
Population growth, policy alignment, and capital migration
Several macro forces are propelling the rise of emerging markets in the data center race.
First is the sheer growth of internet usage and digital services in these regions. Southeast Asia and Africa, for example, are seeing rapid increases in internet penetration and smartphone adoption – millions of mobile-first users are coming online, which translates into exploding demand for cloud storage, video streaming, fintech apps, and AI services delivered locally. More users and more data mean more infrastructure is required closer to those users to ensure low latency and reliable service.
Second, many emerging economies are pursuing data sovereignty and localization. Governments have introduced regulations that require certain data (especially in finance, healthcare, and public sectors) to reside on servers within the country. This regulatory shift makes local data center capacity a strategic necessity. A bank in an emerging market can’t fully embrace cloud or AI if the nearest compliant data center is on another continent. Thus, policy is directly creating demand for domestic and regional facilities.
Third, improvements in connectivity are unlocking new locations. A wave of undersea fiber-optic cables is landing in Latin America, Africa, and Asia, linking cities that were previously isolated from global networks. For instance, new transoceanic cables connecting into West Africa or Southeast Asian archipelagos dramatically cut latency and bandwidth costs. With robust connectivity in place, hyperscale cloud providers and content companies are much more willing to deploy infrastructure in those cities.
Finally, the economics of the industry are encouraging expansion outside traditional hubs. The established data center markets (like Northern Virginia or London) face high land prices, power constraints, and permitting bottlenecks. In contrast, emerging markets often offer cheaper power and real estate, faster approval cycles for projects, and the benefit of first-mover advantage for companies willing to enter early.
In short, the next billion internet users are coming online in emerging markets, and both the demand side (users, data, applications) and the supply side (regulations, connectivity, cost factors) are aligning to make local infrastructure development not only viable but urgent.
Energy, regulation, and financing as the new fault lines
Investing in data centers in emerging markets brings substantial upside, but also a distinct set of risks that must be managed.
One major challenge is reliable power supply. Data centers are energy-intensive – globally they already consume about 1–1.5% of all electricity, a figure expected to rise sharply with AI adoption.
In many emerging economies, national grids are prone to outages or capacity shortages. Power instability can threaten uptime and increase operating costs, so developers often must secure on-site renewables, battery storage, or private power agreements to guarantee 24/7 energy. This adds complexity and expense to projects in regions where public infrastructure is still catching up.
Another risk is the shortage of skilled local talent. Building and running a Tier III or IV data center requires highly trained engineers, technicians, and security personnel.
Emerging markets may lack enough professionals with that specialized experience. Operators are addressing this by investing in local workforce training programs and partnerships with universities. Still, in the short term, a talent gap can slow down operations or force reliance on expatriate expertise.
Political and regulatory uncertainties also loom large. Some target markets face unstable governance, sudden policy shifts, or complex bureaucracies.
A change in government could alter foreign investment rules or impose new regulations on data services. Companies mitigate this by diversifying across multiple countries (not “putting all eggs in one basket”) and by engaging proactively with policymakers. Even so, investors demand higher risk premiums in markets where contracts and rules feel less predictable.
Finally, there are logistical and supply chain issues to watch. Constructing a data center in a developing region can involve long lead times for importing equipment, obtaining permits, and building out connectivity.
Essential components like generators and cooling systems might need to ship from abroad, encountering customs delays. To counter this, some firms are adopting modular designs and assembling components off-site to shorten deployment timelines.
Resilience also needs to be built in at every level – from redundant fiber routes to multiple backup systems – to compensate for less mature infrastructure. In summary, emerging market projects carry more execution risk.
Energy, human capital, governance, and supply chains are all potential stumbling blocks. The successful players will be those who plan for these contingencies from the start and can adapt as conditions evolve.
Early positioning, lower costs, and durable returns
Why take on these risks? Because the strategic advantages of establishing data centers in emerging markets can be compelling.
One key advantage is growth potential. In saturated western markets, adding a new data center might simply split the pie with competitors. But in an underserved emerging market, a new facility can capture pent-up demand and ride a strong growth curve for years.
Early entrants can establish themselves as the default providers in regions that previously had little to no local cloud infrastructure. This first-mover status can translate into loyal enterprise customers, long-term government contracts, and a strong market share before others arrive.
Another advantage is cost efficiency. Many emerging economies offer lower costs for land, construction, and often electricity (especially if tapping into local renewable resources). For example, some Southeast Asian locations have abundant hydropower or geothermal energy that data centers can utilize at competitive rates.
Additionally, governments eager to attract digital investment may offer tax incentives, subsidized land in tech parks, or streamlined permitting. These factors can improve the project economics compared to building in more expensive, constrained markets.
Emerging markets also allow operators to design with a clean slate. New data centers are being built with state-of-the-art designs – highly efficient cooling, renewable energy integration, and modular scalability – without the legacy constraints that older facilities in developed markets might have.
In essence, an emerging market facility can leapfrog legacy infrastructure and be future-proofed from day one. Many are incorporating sustainability and AI-readiness at the core of their design, which not only lowers operating costs (through efficiency) but also aligns with the global push for greener tech infrastructure.
Furthermore, establishing a presence in these markets aligns with strategic national initiatives. Companies that invest in local data centers often find receptive partners in government and local industry. It can open doors to public sector projects (like e-government, national cloud services) and partnerships with telecom providers.
In some cases, sovereign wealth funds or public-private programs will co-invest alongside operators, sharing capital burdens and political risk. This alignment means that an investor is not just building a data center, but embedding themselves in the country’s broader digital ecosystem. In the long run, that can yield a durable competitive edge as these economies grow.
Finally, a diversified global footprint enhances resilience for both operators and their clients. Enterprises increasingly want cloud and colocation options in every region where they do business. By extending into emerging hubs, data center companies can offer truly global coverage and lower latency to end-users in those areas. It also hedges against over-reliance on any single geography.
In the 2020s, geopolitical and supply chain disruptions have underscored the value of diversification. Having data center infrastructure spread across established and emerging markets positions an operator to reroute workloads or tap alternative talent and energy sources if needed.
In sum, while emerging markets come with challenges, they also present a chance to build a new generation of infrastructure with built-in advantages – and to be part of the next chapter of internet growth.
Emerging markets are setting the pace for the next phase of digital expansion
Emerging markets are no longer on the sidelines of the data center race, they are becoming central to its future.
For industry players, the takeaway is that global expansion into these regions is not just an option, but increasingly a strategic imperative.
The growth numbers and demographic trends speak for themselves: the next billion internet users will predominantly come from Asia, Africa, the Middle East, and Latin America, and they will expect local-level performance from digital services.
Companies that build and invest in these markets now stand to benefit from early loyalty, local insights, and support from governments eager to digitalize their economies.
That said, success in these environments requires a calibrated approach. It’s about pairing big-picture vision with on-the-ground pragmatism – investing in cutting-edge facilities while also shoring up power sources, training talent, and engaging policymakers.
Those who can balance the opportunities with the risks will help shape a more geographically diverse and resilient internet infrastructure. In doing so, they aren’t just chasing growth; they are contributing to a more inclusive digital economy where every region has a chance to participate fully in the benefits of the cloud and AI era.
Which emerging market do you believe is best positioned to become a regional digital infrastructure hub by 2030 and why?