What are Data Centers and Why is it the next big thing in Philippine Real Estate?

In 2021, KMC Data Center services forecasted that this industry will drive more movement in the real estate market in the Philippines. Real estate experts have projected that the country will be one of the biggest data center hubs in Southeast Asia as the global economy keeps up with the demand for faster internet and improved digital capabilities.  

Despite the pandemic, the Philippines logged one of the highest growth rates as an emerging data center market alongside Malaysia and Thailand. As the home of the second-largest subscriber base in the region, ‘hyperscalers’ are motivated to build their technology and communication infrastructure throughout the archipelago. 

KMC Industrial and Logistics Services has observed a significant jump in investor interest in this asset type. Senior Director Karen Golez noted in a previous webinar that data centers are overtaking as one of the main economic drivers in industrial real estate. 
 
She added that the Philippines posts as an ideal location in Southeast Asia. This growth is supported by investors decentralizing investment portfolios to focus on information and communication.  
 
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“Another big winner in the industrial sector, and I think the most exciting asset right now, are data centers. Over the pandemic, Southeast Asia has become a key region driving global data centers’ growth,” Golez said. “With the accelerated rate of globalization and the expansion of enterprises, we are seeing the effect in the local market as international data center locators look into the Philippines.”  

KMC Executive Director for Investor Services Jose Carmelo Porciuncula seconded this and said that local investors who have “saved up” capital during the height of the pandemic consider diving into industrial real estate.  

“Investors are currently interested in data centers and telecommunication projects,” Porciuncula added. “More data center facilities will be developed as they anticipate increased activity in this side of the business.” 

What are Data Centers? 

A data center is a physical facility or space that organizations use to house their critical applications and data. It is designed to carry and store a network of computing and storage resources that enables the delivery of shared applications and data. According to Cisco, the key components of a data center design include routers, switches, firewalls, storage systems, servers, and application-delivery controllers. 

Over the years, the need and demand for better infrastructure to house technology that will carry data, servers, and support applications have significantly increased to service more users and heavier data load.

Why are Data Centers Important to Business? 

The pandemic has also catapulted the need for online platforms, software, and websites that can host collaborative and interactive activities that were traditionally held face to face. KMC has identified the top data center market demand drivers and activities in the country that is expected to still grow through the coming time periods. 

The adoption of cloud-based services to support remote and flexible working during lockdowns is one of the biggest demand drivers for the DC market in industrial real estate. The Big Data IoT (internet of things) phenomenon also significantly impacts this sector as large amounts of data on a real-time basis are being generated, processed, and stored. 
 

Data centers are designed to support business applications and activities that include: 

• Email and file sharing 
• Productivity and Cloud-sharing applications 
• Customer Relationship Management (CRM) 
• Enterprise resource planning (ERP) and databases 
• Big data, artificial intelligence, and machine learning 
• Virtual desktops, communications, and collaboration services 

 
READ MORE: The Rise Of Data Centers 

What are the core components of a data center? 

Data center components require significant infrastructure to support the center's hardware and software. These include power subsystems, uninterruptible power supplies (UPS), ventilation, cooling systems, fire suppression, backup generators, and connections to external networks.  

Network Infrastructure 

This connects servers (physical and virtualized), data center services, storage, and external connectivity to end-user locations across the Philippines and across the world. 

Storage Infrastructure  

Data centers also serve as storage of data, making these structures a valuable commodity in a technologically advanced setting.

Computing Resources 

Softwares and cloud applications are the engines of a data center. These servers provide processing, memory, local storage, and network connectivity that drive and process applications. 
 

Learn more about the latest trends in industrial real estate and the Philippine property market. Contact KMC Industrial and Logistics Services head Karen Golez at (+63) 917-524-8029 For inquiries and more information, reach out to us by calling (+63) 2-8403-5519 or sending an email to [email protected].