Data centers have overtaken industrial, manufacturing and distribution as the top-performing construction sector in Southeast Asia, reflecting the surging demand for digital infrastructure from hyperscalers and cloud service providers, alongside growing interest in sustainable, high-performance facilities, Turner & Townsend said Tuesday.
The global professional services company said in a statement that corporate occupier activity has rebounded significantly, while hospitality, sports and leisure developments are seeing a modest uptick as tourism and entertainment gradually return.
Across Southeast Asia, it noted nearshoring trends and the escalating demand for advanced manufacturing facilities are primary drivers of heightened construction activity.
Looking ahead, it highlighted that markets like Vietnam and Malaysia could potentially benefit from surplus of Chinese supply of materials redirected from the U.S. if reciprocal tariffs persists, which may help to accelerate delivery, manage costs and increase their own manufacturing capacity.
However, in Malaysia, recent trade policy changes including anti-dumping duties, introduce uncertainty around future costs and supply chain decisions, it added.
Turner & Townsend also said Southeast Asia’s construction sector is showing strong resilience and adaptability despite global economic headwinds and geopolitical uncertainties, due to rising high-tech demand.
While costs are rising in some areas, it noted the region is experiencing a surge in demand for critical infrastructure such as data centers, alongside a strong shift towards sustainable building practices.
These factors are collectively positioning Southeast Asia as an increasingly attractive and prime destination for global investment in the built environment.
“We are seeing dynamic trends across Southeast Asia, where markets are not merely navigating global economic headwinds but actively seizing opportunities for growth through recalibration of costs and demand,” said Brian Shuptrine, Asia Managing Director, Turner & Townsend.
“The region’s commitment to digital transformation and sustainability, and the strategic advantages of nearshoring, are fundamentally reshaping the construction landscape,
“This translates into significant opportunities for clients investing in future-proof assets, particularly within the rapidly expanding data center developments and advanced manufacturing sectors,” he added.
Malaysia, for an example, the country’s private sector investment is gaining pace, with strong demand for digital infrastructure such as data centers, attracting significant capital inflow from major technology companies.
Turner & Townsend noted the industry is moving towards digital solutions and collaborative models to protect profitability, manage risk, and remain competitive.
Sustainability concerns—such as reducing embodied carbon—are also starting to influence project planning and procurement, signaling Malaysia’s gradual shift towards greener building practices, it added.
As for Indonesia, while the market is gaining gradual momentum, it noted its construction activity is largely driven by steady activity in the data center sector as Indonesia’s digital economy continues to expand.
It noted the local contractors are increasingly securing large-scale data center projects, a positive sign of growing capability and competition in the market.