KUALA LUMPUR: Malaysia’s data centre boom is increasing pressure on power, water and renewable energy supplies.
JLL Malaysia said resource availability and sustainability are becoming key factors in supporting new developments.
While concerns over a potential oversupply have surfaced amid the continued influx of data centre investments, JLL Malaysia data centre expert Keith Ng said demand remained strong.
This is underpinned by the rapid expansion of artificial intelligence (AI) and cloud computing.
He acknowledged the growing number of data centre requirements entering the market but said the continued expansion of AI and cloud services was sustaining demand for the facilities.
“The demand is still coming in a lot, because of the continuous growth of AI, continuous growth of cloud as well,” he said during JLL Malaysia’s Q3 2026 property market briefing today.
However, he stressed that the availability of essential resources must remain a key consideration in approving new data centre developments, particularly as the facilities require substantial power and water capacity to operate.
“I believe the government is taking the right approach in ensuring that there is sufficient availability of essential resources, particularly power and water, to support these developments.
“Ultimately, having the necessary resources in place is crucial to ensuring that data centres can operate efficiently and that the sector can continue to grow sustainably in the long term,” Ng added.
He added that developments located in areas with adequate resources would be better positioned to support the continued expansion of the sector.
Beyond basic infrastructure requirements, renewable energy adoption and the social impact of data centre developments are also becoming increasingly important considerations in the approval process.
JLL chief growth officer Christophe Vicic said the data centre task force required renewable energy to account for 30 per cent of an investment.
Developers were expected to consider the proximity of their proposed facilities to residential areas and public buildings.
He said the location of data centres and their potential impact on surrounding communities had become a more prominent consideration in investment approvals.
The emphasis on resource availability comes as Malaysia continues to position itself as an attractive destination for digital infrastructure investments.
This is supported by growing demand for AI, cloud computing and other technology-related services.
However, the ability to sustain this investment momentum will depend on how effectively infrastructure development keeps pace with the sector’s expansion.
JLL’s wider assessment of Malaysia’s industrial market also highlighted the growing importance of power availability, with electricity supply emerging as a challenge beyond the data centre segment.
JLL Malaysia industrial and logistics representative Derek Yap said electricity availability had become one of the biggest challenges for Johor in attracting higher-value manufacturing investments, particularly in the semiconductor and electrical and electronics sectors.
He noted that although these manufacturers generally required less electricity than data centres, power supply remained a constraint that could affect investment decisions.