Market Scenario 

Cambodia data center colocation market was valued at US$ 156.42 million in 2023 and is projected to hit the market valuation of US$ 415.56 million by 2032 at a CAGR of 12.3% during the forecast period 2024–2032.

Cambodia's data center colocation market is seeing exponential growth, driven by rapid digitalization and the increasing need for secure data storage solutions. Internet penetration has reached 75%, with over 12 million users online, while mobile broadband subscriptions have hit 18 million. The Cambodian government’s favorable policies, including tax incentives for tech investments, have attracted foreign investment, with $200 million funneled into the tech sector in 2023 alone. The rise of cloud services, with over 600 businesses migrating to cloud platforms, is another significant factor driving this growth.

The demand for data center colocation is being fueled by the expansion of the telecommunications network and a surge in IT startups. Phnom Penh remains the top choice for data center locations due to its superior infrastructure and connectivity, housing 70% of the country’s data centers. Meanwhile, secondary cities like Battambang and Kampong Cham are gaining attention, with $60 million invested in digital infrastructure in these regions in the past year. E-commerce growth, with an estimated market value of $1 billion, and the increase in social media usage, with 10 million active users, are also contributing to the rising demand for data center colocation.

Several trends are influencing the data center colocation market in Cambodia. The adoption of cloud computing, IoT, and big data analytics has seen a 40% rise among Cambodian enterprises, driving the need for more advanced data center solutions. Sustainability is a growing focus, with companies like Huawei introducing three new eco-friendly data center solutions. The volume of data from social media and OTT platforms, with users streaming over 600 million hours of content monthly, is pushing the demand for colocation facilities. Additionally, the global trend of edge computing, expected to be worth $3.5 billion in the Southeast Asian region by 2025, is impacting Cambodia’s market, necessitating data centers closer to end-users for improved performance. 

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Market Dynamics 

Trend: Increased Focus on Sustainable and Energy-Efficient Infrastructure

In 2023, Cambodia's data center colocation market has seen a significant shift towards sustainability and energy efficiency. This trend is driven by both global and local pressures to reduce carbon footprints and operational costs. Data centers are now adopting advanced cooling technologies such as liquid cooling and free-air cooling, which have been proven to drastically reduce energy consumption in tropical climates. Additionally, renewable energy sources like solar and wind power are being increasingly integrated, with some data centers achieving substantial portions of their energy from renewables. For example, a leading data center in Phnom Penh has incorporated 5,000 solar panels on its rooftop, significantly reducing its reliance on the grid. Industry leaders are also investing in green building certifications such as LEED, with an increase in the number of certifications for data centers this year. LEED-certified data centers in Cambodia now cover over 100,000 square meters of floor space. Moreover, modular data centers are gaining popularity due to their ability to optimize space and energy use. One notable project recently deployed 50 modular units to enhance flexibility and efficiency.

Another critical aspect of this trend in the Cambodia data center colocation market is the adoption of AI and machine learning for energy management. These technologies help in real-time monitoring and optimization of power usage, leading to significant energy savings. A recent deployment of AI in a Siem Reap data center resulted in a reduction of 10 megawatts in annual energy consumption. The push for sustainability is further supported by government policies and incentives aimed at promoting green technologies. Data centers are also exploring the use of battery storage systems to ensure a consistent power supply while minimizing dependency on traditional power grids. One data center has installed a battery system capable of storing 20 megawatt-hours of energy. 

The focus on sustainability is not just about regulatory compliance but also about gaining a competitive edge. Customers are increasingly prioritizing environmental responsibility when choosing their data center providers. A survey in 2023 showed that 70% of businesses in Cambodia consider sustainability a key factor in their choice of data centers. This makes sustainability a key differentiator in the market. The increased focus on sustainability has also led to improvements in operational efficiencies and cost savings. Innovations in green technologies are being rapidly adopted, enhancing the overall performance of data centers. Furthermore, collaborations with environmental organizations are also on the rise, promoting best practices in sustainability, with over 20 partnerships formed in the past year.

Driver: Government Incentives and Policies Supporting Data Center Industry Development

The Cambodian government has been proactive in fostering the growth of the data center colocation market through various incentives and supportive policies. One of the most impactful measures has been the provision of tax breaks and exemptions for data center operators. These financial incentives have led to the establishment of ten new data centers in the past year. Additionally, the government has streamlined the regulatory approval process, significantly reducing the time required to commence operations. The average approval time for new data center projects has dropped to six months. The establishment of special economic zones with dedicated infrastructure for data centers is another strategic move aimed at attracting investment. These zones offer benefits such as reduced land acquisition costs and enhanced connectivity options. For instance, a new economic zone near Sihanoukville is expected to host three major data centers by the end of 2024.

In 2023, the government launched a national digital policy aimed at accelerating digital transformation across all sectors. This policy includes specific provisions for the development of data center infrastructure, such as grants for research and development in data center technologies. The government has allocated over $50 million for R&D initiatives this year, giving a must needed boost to the data center colocation market. The government is also collaborating with international bodies to set industry standards and best practices. These collaborations have led to the adoption of global standards in 15 Cambodian data centers. Public-private partnerships are being promoted to leverage the expertise and resources of private companies in building state-of-the-art facilities. In the past year, five major public-private partnerships have been formalized. Additionally, the government is investing in educational initiatives to develop a skilled workforce capable of supporting the growing data center industry. Over 1,000 new data center professionals have been trained through government-sponsored programs in 2023. These comprehensive measures are creating a conducive environment for the rapid development of the data center colocation market in Cambodia.

Moreover, the government has been actively engaging with foreign investors to boost confidence in the market. This engagement has resulted in securing $200 million in foreign investments specifically for data center projects. The introduction of incentives specifically for green and sustainable data centers further underscores the commitment to eco-friendly development. The government has also provided land leases of up to 99 years for data center projects, ensuring long-term stability for investors. Infrastructure improvements, such as better power and cooling systems, are being prioritized to support data center operations. 

Challenge: High Initial Investment Costs for Establishing Modern Colocation Data Centers

Despite the promising growth prospects, the high initial investment costs remain a significant challenge for establishing modern data centers in Cambodia data center colocation market. The expense of procuring advanced hardware and software, coupled with the costs of constructing state-of-the-art facilities, can be prohibitive. For instance, advanced energy-efficient cooling systems and renewable energy integrations require substantial upfront capital. A newly established data center reported an initial investment of $50 million for energy-efficient technologies. Additionally, the cost of importing specialized equipment due to limited local manufacturing capabilities adds to the financial burden. Importing high-end servers and networking equipment can cost up to $10 million for a mid-sized data center. Land acquisition and construction costs are also high, especially in prime locations that offer the necessary connectivity and infrastructure. A recent project in Phnom Penh required $20 million just for land acquisition.

Moreover, securing financing for such large-scale projects can be a daunting task in the data center colocation market. Traditional financial institutions are often hesitant to invest in data center projects due to the perceived risks and long ROI periods. A study in 2023 indicated that only 40% of loan applications for data centers are approved. This challenge is exacerbated by the relatively nascent state of Cambodia's financial markets, which lack the depth and maturity to support extensive venture capital or private equity investments in the tech sector. Many operators are therefore exploring joint ventures and partnerships to pool resources and share risks. However, the complexities involved in negotiating such agreements can delay project timelines. Joint venture negotiations have extended project timelines by six to twelve months in several cases. The high initial investment costs not only limit the entry of new players but also constrain the expansion plans of existing operators. Expansion plans for several established data centers have been postponed due to insufficient funding.

Segmental Analysis 

By Component 

Based on component, the colocation data centers segment is currently dominating the Cambodia data center colocation market with revenue share of over 69.8% market share. The segment generates higher revenue than colocation services in Cambodia. There are approximately 50 colocation data centers in Cambodia as of 2023, compared to over 200 globally recognized colocation data centers. These centers offer comprehensive services including space, power, cooling, and physical security, which are critical for businesses that require high uptime and reliability. The average uptime of a colocation data center is 99.995%, which translates to less than 26 minutes of downtime annually, a key metric for businesses that cannot afford interruptions. In contrast, smaller colocation services may offer less robust infrastructure, leading to higher potential downtime. The power density in these centers can reach up to 15 kW per rack, far exceeding the capabilities of smaller facilities. Additionally, colocation data centers often provide access to multiple power grids, backup generators, and battery systems, ensuring continuous operation even during power outages.

Furthermore, the scalability and flexibility offered by colocation data centers are significant revenue drivers in the data center colocation market. Businesses can rent space as needed, allowing them to scale operations without the capital expenditure of building and maintaining their own data centers. The average rental cost per rack in a colocation data center is $1,200 per month, which is a manageable expense for growing businesses. Colocation centers typically offer service-level agreements (SLAs) guaranteeing 100% power availability and robust security measures. The demand for colocation services is also driven by the increasing adoption of cloud services and high-performance computing, which require substantial infrastructure. Global cloud service adoption has increased by 25% in the last year, reflecting the need for reliable data centers. Additionally, 80% of enterprises are expected to adopt multi-cloud strategies by 2024, further boosting demand for colocation services. Sustainable energy sources power 70% of these data centers, aligning with corporate sustainability goals. These factors collectively contribute to the higher revenue generation of colocation data centers compared to colocation services in Cambodia.

By Data Center Type

Tier-3 and Tier-4 colocation data centers are dominating the Cambodia data center colocation market with revenue share of over 80.4% and is projected to keep dominating the market by growing at a CAGR of 12.6% in the years to come. The dominance is largely driven by the country's rapid urbanization and increasing digital infrastructure needs. As Cambodia continues to urbanize, with urbanization rates increasing by 2.5% annually, the demand for robust and reliable data centers has surged. Tier-3 and Tier-4 data centers, known for their high availability and minimal downtime, are essential to support the growing digital economy. These facilities offer an uptime of 99.982% and 99.995%, respectively, which is crucial for businesses that require uninterrupted services. Additionally, the rise in internet penetration, which has reached 80% of the population, and the increase in mobile broadband users, now at 12 million, further drive the need for advanced data centers to handle the growing data traffic and storage requirements.

Moreover, the strategic investments in Cambodia's digital infrastructure have played a significant role in the dominance of these high-tier data centers in the data center colocation market. The government's initiatives to attract foreign direct investment (FDI) in the tech sector have resulted in a 15% annual growth in the data center market. International tech giants like AWS, Microsoft, and Google are expanding their cloud regions in Cambodia, necessitating the development of Tier-3 and Tier-4 facilities to meet global standards. The Asia-Pacific data center market, which includes Cambodia, is expected to grow significantly, with Tier-4 data centers projected to register a CAGR of 20.4% CAGR. Furthermore, the implementation of green technologies and sustainable practices in these data centers aligns with global trends, making them more attractive to environmentally conscious businesses. The integration of advanced cooling techniques and energy-efficient systems helps reduce operational costs and environmental impact, ensuring the long-term viability and dominance of Tier-3 and Tier-4 colocation data centers in Cambodia.

 By Enterprise Size 

Large enterprises are the leading consumers of the data center colocation market with market share over 71.1% in Cambodia. These enterprises generate vast amounts of data, necessitating extensive storage and processing capabilities that colocation centers can provide. This dominance is driven by the need for scalable, reliable, and secure data management solutions, which colocation centers offer. Additionally, the shift from traditional on-premises models to colocation and cloud services has been significant among large enterprises, driven by the need for enhanced data security and operational efficiency. The high costs associated with building and maintaining in-house data centers, which can exceed USD 300 per square foot, further incentivize large enterprises to opt for colocation services. 

Moreover, the strategic advantages of colocation, such as improved power usage effectiveness (PUE) and efficient cooling systems, are crucial for large enterprises in the data center colocation market. Efficient cooling, which accounts for about 40% of a data center's energy consumption, is essential for maintaining the productivity and profitability of these centers. The presence of major colocation providers like Equinix and NTT, which offer robust service level agreements (SLAs) and extensive global networks, also attracts large enterprises. Additionally, the scarcity of available colocation space, with vacancy rates as low as 1.9% in some regions, highlights the high demand from large enterprises. This demand is further amplified by the need for real-time data processing and low-latency applications, which are better managed in colocation centers.

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By Industry 

The IT and Telecom industry is dominating the Cambodia data center colocation market with revenue share of over 28.8% due rapid expansion and adoption of 5G technology have significantly increased the demand for data processing and storage capabilities. For instance, Smart Axiata, a major telecom player, has invested USD 90 million in infrastructure developments, including the deployment of over 300 new base stations to extend 4G coverage across nine provinces. This expansion is driven by the increasing number of mobile connections, which stood at 21.4 million as of Q1 2020. The telecom sector's focus on providing faster data services and high-resolution video content further necessitates robust data center solutions. Additionally, the rise of OTT services like Netflix and Amazon Prime has created new growth opportunities, requiring substantial data storage and processing capabilities.

Moreover, the IT and Telecom industry's dominance in the data center colocation market is also fueled by the need for high connectivity and low latency to support emerging technologies such as IoT, virtual reality, and AI/ML. The transformation of telecom data centers to handle high data volumes and low latency needs is crucial for the industry's growth. The Cambodian government's Telecommunications and ICT Development Policy 2020 has also played a significant role in promoting the sector's competitiveness and sustainable economic growth. The policy aims to enhance the digital infrastructure, further driving the demand for colocation services. 

Top Players in Cambodia Data Center Colocation Market 

• ByteDC
• China Telecom
• Chaktomuk
• Ezecom
• KEPSTAR Data Center
• MekongNet IXP
• NeocomISP’s (NTC)
• KDDI Corporation
• Singtel
• Telcotech’s Data Centre
• Other Prominent Players

Market Segmentation Overview:

By Component

• Colocation Data center
  • Electrical Systems
    • UPS
    • Generators
    • PDUs
    • Switches & Switchgears
    • Other Electrical Components
  • HVAC Systems
    • CRAC & CRAH
    • Cooling Towers
    • Chiller Units
    • Other Components
  • IT Systems
    • Servers
    • Storage
    • Network
  • General Construction
    • Building Design & Development
    • Installation & Commissioning
    • Physical Security
    • DCIM & BMS
    • Facility Management Services
• Datacenter Colocation Services
  • Retail Colocation
    • 1U-10U
    • Quarter rack
    • Half rack
    • Full rack
  • Wholesale Colocation

By Datacenter Type

• Tier 1
• Tier 2
• Tier 3 & 4

By Enterprise Size

• SMEs
• Large Enterprises

By Industry

• BFSI
• Retail
• E-commerce
• IT & Telecom
• Entertainment & Media
• Healthcare
• Automotive
• Education
• Transportation
• Oil & Gas
• Others