Juwai IQI – Malaysia’s Data Centre Capacity on Track to Nearly Quadruple by End of 2026

Categories: Press Releases (developers and more)

Juwai IQI – Malaysia’s Data Centre Capacity on Track to Nearly Quadruple by End of 2026

Malaysia’s data centre development pipeline looks strong, with operating capacity on track to nearly quadruple by the end of 2026, according to a report released today by Kuala Lumpur-headquartered global proptech group Juwai IQI. What’s more, the industry claims that world-leading sustainability measures mean the new capacity will use less power and water.

“The outlook for data centre development is robust through 2030,” said the company’s Co-founder and Group CEO, Kashif Ansari. “Developers say they are putting in place new sustainability and social measures that will reduce both water and power usage. Local content requirements are also increasing the benefits to Malaysia’s economy. In our report today, we will look at the sector in great detail.”

Large New Development Pipeline

“We expect operating data centres in Malaysia to reach about 2,055 MW by the end of this year,” said Mr Ansari. ¹ “That’s nearly four times the level of the first quarter of last year, 2025, when 522 MW was operational. ²

“By 2030, we expect 8 GW to 9 GW to have been added to capacity in Malaysia. ³

“To understand these figures, it helps to know that when experts describe the size of a data centre, they don’t measure it in square metres or the number of stories. Instead, they measure it in megawatts, which refers to how much electricity it can use at once. The more electricity it can draw, the more servers it can run, and the more work it can accomplish. A one-megawatt data centre uses a similar amount of electricity as about 750 to 1,000 average homes. ⁴

“Unlike in some markets where developers build speculatively, before they have customers signed up, most newly built data centres in Malaysia already have committed users. We can find evidence of this in the pre-leased capacity statistics, which refer to the data centre space that customers have signed contracts to rent, even before the facility is actually built. Just like with a commercial office building, when developers can rent all the space before it is built, they have dramatically reduced their financial risk.

“Our pre-leased capacity in this country has climbed from about 0.85 GW in the first half of 2025 to 1.2 GW in the 1st half of this year. Malaysia ranks 2nd in all of the Asia Pacific, according to this metric, which demonstrates how strong and well-regulated the Malaysian industry is. Only Japan ranks higher.”

Community Feedback Makes a Better Industry

“The ASEAN+3 Macroeconomic Research Office (AMRO) has reported that Malaysia has successfully restricted new non-AI data centres,” said Mr Ansari, “because they tend to have excessive water and power demands. ⁵ And the tech companies must pay a premium for water and energy supplies if they want to operate in Malaysia. ⁶

“Malaysian data centres are required to use less power and water than those in most other countries. Every new data centre is required to be about 10% more power efficient than is typical overseas. ⁷

“At the same time, data centre developers are helping pay for a boom of new power generation projects, much of it for green energy. In total this will help add as much as 18 gigawatts of gas and renewable capacity in Malaysia by 2030. ⁸

“Malaysian data centres must also save water, or they won’t get approved. Johor is the epicenter of data centre development, and the state rejects three out of every 10 data centre applications precisely because they don’t meet sustainability requirements. ⁹ In Johor, the industry also uses 12 million litres a day of treated sewage effluent, instead of the potable water that can go to households. ¹⁰

“One example comes from the Chinese company, ZData, which is building a hyperscale data centre in Gelang Patah that will cost about RM8 billion. ¹¹ This project is getting the top rating under Malaysia’s green building scheme, GreenRE Platinum certification. It also earned the Malaysia Green Data Centre Recycled Water Certification in August 2025 and will have access to clean solar energy from a solar plant that will start operating in 2028. At least 200 of the 400 to 500 jobs at the completed data centre are reserved for Malaysian talent.

“Data centre sustainability is a big issue in North America, in Europe, and in other parts of Asia, but the Malaysian government has taken concrete actions that require improvements.”

Demands that Data Centres Drive Economic Growth

Mr Ansari said, “Another public demand has been that data centres deliver more jobs and income for Malaysians. This is why Selangor has required that all new data centres use Malaysian firms to provide 30% of the content they install in their facilities. ¹²

Roughly, that means that 30 sen of every ringgit spent on installed content goes to local companies.

“At the federal level, the government also encourages data centres to use local content, with tax incentives. ¹³

“And Malaysia has stopped approving new data centres that are not AI-focused, hyperscale-grade, high-efficiency projects. These projects bring the most investment while also being the most efficient with power and water. ¹⁴

“While Malaysia has demanded more of the data industry, its competitive advantages have helped to continue to attract the right kind of data centre developers. Malaysia is on track to become Southeast Asia’s largest data centre market by 2030, and it will be significantly more sustainable than it is today.”

¹ https://www.aitraining2u.com/malaysia-data-centre-boom-2026.html 

² https://www.nst.com.my/amp/property/2025/11/1314026/malaysias-data-centre-boom-powers rm126-billion-construction-supercycle

³ https://www.nst.com.my/business/corporate/2026/09/1528813/malaysias-data-centre-boom opens-rm162bil-me-market

⁴ https://amblesun.solar/blog/how-many-homes-can-1-megawatt-power/ 

⁵ http://www.amro-asia.org/malaysias-data-center-boom-from-investment-surge-to-sustainable-growth

⁶ https://www.ft.com/content/14d77d11-847e-4950-ab67-67a02e5324db?syn-25a6b1a6=1

⁷ https://www.mida.gov.my/wp-content/uploads/2024/12/Guideline-for-Sustainable-Development-of Data-Centre.pdf2

⁸ https://techwireasia.com/2026/03/malaysia-data-centre-policy-ai-moratorium/ ⁹ http://www.malaymail.com/news/malaysia/2024/11/20/official-johor-snubbed-30pc-of-data-centre-bids for-not-meeting-sustainability-goals/157396

¹⁰ https://theedgemalaysia.com/node/800314 