The Philippines will need approximately $1.09 billion worth of capital to build data centers in the pipeline for the coming five to seven years, according to Cushman & Wakefield.

In a statement, the commercial real estate services firm said this covers a development pipeline of 156 megawatts, with an average construction cost of $6.97 million per MW.

Based on Cushman & Wakefield’s Asia-Pacific data center construction cost guide 2025, the Philippines posted a 3.9-percent increase in data center construction costs this year.

“The Philippines has seen high interest levels from data center propco (property company deal) and opco (operating company) players looking to capitalize on the country’s population-to-capacity imbalance,” Cushman & Wakefield said.

Compared to its regional neighbors, the Philippines ranks 12th in terms of the capital requirement for its data centers in the pipeline.

Cushman & Wakefield estimates that Asia-Pacific will need approximately $116 billion worth of capital requirement to build the existing colocation data center pipeline across the region in the coming five to seven years as demand for the sector grows.

It added that the pipeline of colocation projects in the region either currently under construction or in late-stage planning stands at 12,452 MW.

“By Cushman & Wakefield estimates, this development pipeline provides an opportunity to generate over $14.9 billion in annual colocation rent and can potentially achieve almost 13 percent yield-on-cost ratio for developers,” Cushman & Wakefield said.

Japan has the largest capital requirement at $35.44 billion with a pipeline of 2,678 MW. This is followed by India with a capital requirement of $16.38 billion and 2,299-MW worth of data centers in the pipeline.

Other markets with large capital requirements are Australia ($15.51 billion), China ($13.44 billion) and Malaysia ($11.59 billion).

“Demand for the sector continues to grow. The Asia-Pacific development pipeline is already three times greater than existing operational capacity and as demand for cloud, AI, and large learning machine models increase, the capex requirements continue to grow in scale,” said Pritesh Swamy, Cushman & Wakefield head of research and insights data center group for Asia-Pacific.

Swamy said the investment potential of the sector has captured the attention of investors, as evidenced by the sector’s increasing share of annual real estate investment volumes.

“The often-quoted 20-plus percent CAGR on data center development and the sector’s potential rental streams mean we continue to see a vast array of participants seeking exposure to development. We have seen these investments rapidly evolve from smaller plays on, for example, a piece of land, to larger scale deployments requiring consortiums that bring together a number of different positions. We do expect to see consolidation as the sector matures, but for now at least, the capital requirements mean the sector continues to attract vast capital at a faster rate than other asset classes in the CRE universe,” Cushman & Wakefield head of Capital Markets, Asia-Pacific, Gordon Marsden said.

Marsden said a slow uptick in transactional activity had helped to provide some clarity around pricing in the past 18 months.

“We have seen a flurry of valuation activity in response to recent transactions in Japan, Korea and Singapore. Mostly, these have been legacy data centers that have leaned into enterprise tenants and colocation operators, rather than hyperscale, but they have nonetheless provided some clarity around pricing,” he added.