In the ever-evolving digital landscape, the appetite for data has exploded. From generative AI workloads to hyperconnected cities and edge computing, the data center industry has shifted from a centralized to a highly distributed model. While metropolitan behemoths like Singapore, Tokyo, and Sydney have traditionally dominated the Asia-Pacific (APAC) data center narrative, a quieter revolution is unfolding: the emergence of secondary cities across APAC as serious contenders in the global data center race.
Welcome to the era of the “Green Belt” — a term that encapsulates these fast-rising, infrastructure-adept, environmentally forward, and economically viable Tier 2 and Tier 3 cities that are fast becoming indispensable to the region’s digital future.
As these cities emerge, a more nuanced view is required. The Green Belt is not simply a response to constraints in Tier 1 metros — it’s a strategic recalibration of how and where infrastructure must evolve. For stakeholders, this shift signals a redefinition of competitive advantage and a redistribution of digital real estate that could have long-term geopolitical and economic implications.
1. What Defines a ‘Green Belt’ City in APAC?
The term “Green Belt” in this context is symbolic. It reflects:
-
Sustainability-centric infrastructure development
-
Geographic and seismic stability
-
Lower land and power costs
-
Emerging local tech ecosystems
-
Supportive government policies with high digital intent
These cities serve as a buffer to overcrowded, cost-intensive, and regulation-heavy primary metros. Yet they don’t compromise on enterprise-readiness, connectivity, or talent.
What makes these cities even more attractive is their adaptability. Unlike overburdened Tier 1 cities, Green Belt cities often allow for custom-designed data center campuses, integration with clean energy sources from inception, and stronger local partnerships driven by inclusive development goals.
2. The Perfect Storm: Why Now?
Several converging forces are pushing hyperscalers, cloud service providers (CSPs), and colocation operators toward these greener pastures:
-
Land and Power Scarcity in Major Hubs: Land acquisition is complex in Singapore, Tokyo, and Hong Kong. The data center moratorium in Singapore and tight urban zoning laws elsewhere are making expansion difficult.
-
Energy Efficiency Mandates: Countries like Australia and Japan are enforcing carbon-neutral goals, requiring data center operators to meet new benchmarks that are often easier in less crowded regions.
-
AI and Edge Computing Boom: GPU-based workloads require decentralized processing and proximity to users. Edge locations in secondary cities are perfect staging grounds.
-
Supply Chain Diversification: COVID-19 taught hyperscalers a tough lesson. Spreading out risk through geographic diversity is now table stakes.
-
Policy-Driven Decentralization: Governments are actively incentivizing companies to invest in secondary cities, offering tax reliefs, RE credits, and custom SEZ regulations for digital infra operators.
This alignment of market necessity and public policy forms a rare window for proactive players to secure long-term competitive advantage.
3. The Green Belt Cities Redefining the APAC Map
a) Johor Bahru, Malaysia
-
Direct spillover from Singapore’s data center moratorium.
-
Tenaga Nasional Berhad (TNB) powering green energy investments.
-
Strategic link via Causeway and new cross-border fiber optics.
-
Leading players: Yondr, Bridge Data Centres, Keppel DC.
-
Malaysian government offering land grants and grid prioritization.
b) Osaka, Japan
-
Seismically stable compared to Tokyo.
-
NTT, Equinix, and Digital Realty expanding.
-
Government push for regional data centers post-Fukushima.
-
Interconnection-rich ecosystem with proximity to GPU R&D clusters.
-
Ideal for digital twins, AI labs, and cloud gaming backends.
c) Chennai and Hyderabad, India
-
Coastal city (Chennai) with subsea cable landing stations.
-
Hyderabad as a SaaS hub with enormous local demand.
-
Solar and wind-friendly states (Tamil Nadu, Telangana).
-
Players: CtrlS, AdaniConneX, Princeton Digital Group.
-
Chennai now linked to 14 international cables with new landing stations approved.
d) Batam and Cikarang, Indonesia
-
Overspill from Jakarta’s congested data center landscape.
-
Close to Singapore and part of the Riau Islands digital triangle.
-
Inexpensive land and new RE plants.
-
DCI Indonesia, Princeton Digital, EdgeConneX are investing heavily.
-
Batam positioning itself as the “new Johor” with faster permitting.
e) Ho Chi Minh City, Vietnam
-
Fastest-growing cloud market in SEA.
-
Strategic alternative to Hanoi.
-
International fiber connectivity and government tech parks.
-
Increased demand for localized data residency and privacy.
-
Telecom Vietnam and Viettel partnering with global players on local compliance.
4. Environmental Leverage: Powering Green Ambitions
Data centers account for nearly 2-3% of global electricity consumption, which is expected to double by 2030. The Green Belt cities offer:
-
Proximity to renewable energy zones (solar belts in India, wind farms in Australia, hydro in Vietnam).
-
PPA (Power Purchase Agreement)-friendly regulations.
-
Ambient cooling opportunities due to higher altitudes or coastal winds.
-
Next-gen power distribution networks backed by local governments.
These cities enable developers to meet Scope 2 and Scope 3 emission goals much more cost-effectively. Energy suppliers are also collaborating to create direct RE corridors linking DC campuses to solar or wind generation farms.
In India, AdaniConneX has signed long-term solar PPAs specifically for Chennai and Noida, while in Vietnam, hydroelectric incentives are drawing hyperscalers.
5. Talent, Tech, and Tenacity
Another driver of Green Belt adoption is access to:
-
Local talent: Emerging engineering schools and upskilling programs in these cities.
-
Lower attrition and operating costs: Compared to Tier-1 urban centers.
-
Tech entrepreneurship: Secondary cities often have strong start-up ecosystems without the saturation of capital cities.
-
Infrastructure cooperation: From railway to fiber and smart grid alignment, there’s often more integration flexibility.
Education and training partnerships are multiplying. For example, Telangana’s TASK initiative is now aligned with DC operators to build a certified talent pool. In Batam, polytechnics are adding cloud and DC ops into their curriculum.
6. Risks and Realities
Transitioning to Green Belt cities isn’t without its challenges:
-
Infrastructure Gaps: While improving, last-mile fiber and utility redundancy can still be weak.
-
Policy Volatility: Tax laws, FDI norms, and renewable energy pricing can shift rapidly.
-
Seismic and Climate Risks: Flooding in Vietnam, seismic activity in Indonesia need mitigation strategies.
-
Latency Trade-offs: For latency-critical applications, secondary cities may still trail Tier-1s.
Mitigation strategies include modular edge nodes, higher redundancy design (Tier IV), and pre-built fiber corridors in new zones. Governments are increasingly open to multi-stakeholder policy shaping, allowing infra providers to influence future zoning and compliance mechanisms.
7. Global Investment and Partner Ecosystems
Investors are watching. According to a 2024 report by Structure Research:
-
Over $25 billion in planned hyperscaler and colocation investment is being funneled toward APAC secondary cities by 2026.
-
Private equity and sovereign funds from the Middle East and the US are entering India, Indonesia, and Vietnam data infra markets.
-
Joint ventures between local telcos and global DC brands (e.g., STT GDC, Iron Mountain, PDG) are on the rise.
-
Strategic land banking is accelerating in Johor, Hyderabad, and Osaka outskirts.
Further, ESG-focused funds are prioritizing Green Belt cities for clean-tech aligned infrastructure. REITs in Singapore and Australia are exploring multi-city portfolios across secondary APAC regions to mitigate valuation risks from saturated Tier 1 assets.
8. Strategic Takeaways for the Industry
If you’re a hyperscaler, enterprise CIO, or infrastructure provider, the implications are clear:
-
Invest early in land, fiber rights, and renewable assets.
-
Form local partnerships for compliance and continuity.
-
Design modular and scalable DC architecture for fast deployment.
-
Monitor geopolitical and climate risk indicators more closely than ever.
-
Stay agile – market leadership will be defined by the ability to go where growth is emerging, not just where it has already happened.
-
Prioritize ESG alignment to unlock sustainable financing and local goodwill.
-
Leverage automation in construction and operations to overcome skilled labor limitations.
A diversified Green Belt strategy is not only cost-effective but future-proof. It delivers on both risk mitigation and performance optimization metrics.
Conclusion: A Quiet, Decisive Shift
The data center industry is undergoing a spatial transformation in APAC. The rise of secondary cities as digital infrastructure hubs signals a new era where sustainability, decentralization, and resilience converge. The Green Belt is no longer just an alternative — it’s becoming the new default.
As data becomes the world’s most valuable resource, cities once seen as peripheral are becoming pivotal. Whether you’re planning your next data center build, diversifying edge locations, or scouting renewable energy partnerships, overlooking the Green Belt may no longer be an option.
The next wave of data infrastructure dominance won’t be built in glass towers in capital cities. It will rise from coordinated government planning, strategic energy corridors, and local innovation in cities most global maps still ignore. That is the power of the Green Belt.
Explore the future of infrastructure. Stay ahead.
Visit www.techinfrahub.com for deep insights, strategic intelligence, and real-time market trends.
Or reach out to our data center specialists for a free consultation.
Contact Us: info@techinfrahub.com