Malaysia’s operational data centre capacity is projected to reach about 2,055 megawatts (MW) by the end of 2026, nearly four times the 522MW recorded in the first quarter of 2025, according to Juwai IQI.
In a report released today, Juwai IQI co-founder and group chief executive officer Kashif Ansari said the country’s data centre development pipeline remained strong, with an additional 8GW to 9GW of capacity expected to be added by 2030.
“The outlook for data centre development is robust through 2030,” Ansari said, adding that developers were introducing measures aimed at reducing water and electricity consumption while increasing local economic participation.
Malaysia’s pre-leased data centre capacity — space contracted by customers before facilities are completed — increased from about 0.85GW in the first half of 2025 to 1.2GW in the first half of 2026, placing the country second in Asia-Pacific behind Japan, according to the report.
Juwai IQI said the high level of pre-leasing suggested much of the new supply was being developed with committed customers rather than on a purely speculative basis.
Sustainability Requirements Shape New Projects
The report highlighted tighter sustainability requirements as a key feature of Malaysia’s data centre expansion.
Ansari said approvals increasingly favour AI-focused, hyperscale and higher-efficiency developments, while operators are being required to improve energy and water efficiency.
In Johor, which remains Malaysia’s main data centre hub, Juwai IQI cited industry data indicating that about 30% of applications have been rejected for failing to meet sustainability requirements.
The report also said Johor data centres are using about 12 million litres of treated sewage effluent per day, reducing reliance on potable water.
Data centre investment is also expected to spur additional power infrastructure, with Juwai IQI estimating that as much as 18GW of new gas and renewable generation capacity could be added in Malaysia by 2030.
One project highlighted was ZData’s planned RM8 billion hyperscale facility in Gelang Patah, Johor, which the report said is targeting GreenRE Platinum certification and greater use of recycled water and renewable energy.
Push For Greater Local Economic Benefits
Juwai IQI said policymakers are also seeking stronger domestic spillovers from the sector.
Selangor, for example, requires new data centres to source 30% of installed content from Malaysian companies, while federal tax incentives also encourage greater local participation.
Ansari said these requirements could help ensure that the rapid growth of data centres creates more opportunities for Malaysian suppliers and skilled workers.
Juwai IQI expects Malaysia to become Southeast Asia’s largest data centre market by 2030, supported by continued investment in AI infrastructure, hyperscale facilities and stricter sustainability standards.
