Equinix (EQIX) to Expand Into Malaysia With New Data Center
As part of its efforts to expand in the Asia-Pacific region, Equinix, Inc. EQIX unveils plans to build a new International Business Exchange (IBX®) data center in Malaysia’s Nusajaya Tech Park (NTP) in Iskandar, Johor.
Malaysia is one of the top three colocation markets in the Association of Southeast Asian Nations (“ASEAN”). The growing demand and investment from hyperscalers and cloud service providers, as well as national policies in favor of digital growth in the Malaysian market, make Equinix’s latest move a strategic fit.
This will also mark the company’s second venture into ASEAN following its announcement to expand into the Indonesian market.
The data center, to be known as JH1, will have an initial investment of around $40 million. The operations of this two-story facility are set to begin in first-quarter 2024. It is expected to provide 500 cabinets and 1,960 square meters of colocation space.
The world-class IBX data center will provide Malaysian companies and multinationals operating businesses in the country access to Platform Equinix® to bring together and interconnect the foundational digital infrastructure.
With Platform Equinix®, the companies will be able to accelerate their transformation from traditional to digital businesses by rapidly scaling their infrastructure, easily adopting hybrid multi-cloud architectures and interconnecting with strategic business partners within the Platform Equinix ecosystem of more than 10,000 customers.
Equinix’s expansion into the Malaysian market is in line with the government’s MyDIGITAL initiative, through which it aims to provide a blueprint for the country to accelerate the growth of digital products and services.
Moreover, JH1 is strategically located just 15 kilometers from Singapore, enabling it to address the excess demand from organizations in the city-state in addition to the Malaysian domestic demand.
The demand for high-performing data centers is anticipated to escalate in the coming years amid high growth in cloud computing, the Internet of Things and Big Data and elevated demand for third-party IT infrastructure.
Further, growth in artificial intelligence, as well as autonomous vehicle and virtual/augmented reality markets, is expected to be robust over the next five-six years, providing excellent growth opportunities for this data center REIT.
Equinix is focused on tapping such growth opportunities with its acquisition and development efforts and has been very active on this front.
In October 2022, the company announced plans for a $74 million IBX data center in Jakarta. This expansion into the Indonesian market will help Equinix capitalize on the country’s growing digital needs. Further, in August 2022, it acquired a data center in Peru from Entel for $80.3 million. This year, it even announced expansion plans into Chennai, India.
At present, in the Asia-Pacific region, EQIX has 51 data centers across 13 metros across Australia, China, Hong Kong, India, Japan, Korea and Singapore.
With a solid balance-sheet position and ample financial flexibility, Equinix remains well-positioned to capitalize on long-term growth opportunities.
EQIX currently carries a Zacks Rank #3 (Hold). Its shares have gained 21.4% in the quarter-to-date period compared with the real estate market’s growth of 7.4%.
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Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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