Singapore PE Hub Faces Data Centre Shift to Lower-Cost Markets

Singapore Remains Southeast Asia’s Private Equity Hub Amid Data Centre Shift

Singapore remains the primary hub for private equity deals in Southeast Asia, but investors are increasingly directing capital toward data centre projects in lower-cost neighbouring markets, according to a new report from management consulting firm Bain & Company.

In 2025, the Southeast Asian region attracted approximately US$14 billion (S$18 billion) of private equity investments across 84 deals, with Singapore accounting for the largest share at US$7 billion, followed by Malaysia at US$5.3 billion, Bain said.

Data Centre Market Dynamics and Regional Shift

In the rapidly growing data centre sector—driven by cloud computing and artificial intelligence adoption—investors are increasingly placing capital in lower-cost neighbouring markets such as Johor in Malaysia, Batam in Indonesia, and Chonburi in Thailand, rather than Singapore.

Singapore faces significant constraints in data centre development. Land is scarce and expensive at approximately US$1,700 (S$2,174) per square metre. Additionally, power supply is tight, and new projects can take five to seven years to secure grid connections.

Given these limitations, neighbouring markets are projected to capture much of the spillover demand, which is estimated to reach around 10 gigawatts of capacity by 2030, according to Bain.

Singapore’s Continued Appeal for Strategic Operations

Despite the data centre shift, Singapore will continue to attract capital as the “strategic base for leading operators,” given its strong connectivity and stable regulatory environment, said Tom Kidd, head of Bain’s Southeast Asia private equity practice.

Recent deal activity supports this outlook. Singapore-headquartered data centre company Digital Edge raised over US$1.6 billion in 2025 to support its growth. Princeton Digital Group, another Singapore-based company, secured US$1.3 billion in 2025 to fund its regional expansion. Other Singapore-based companies that secured significant investments in 2025 include logistics firm GLP and power infrastructure provider Amperesand.

Market Slowdown and Cautious Investment Climate

Overall, private equity activity in Southeast Asia has slowed in 2025 compared with 2024, both in terms of value and number of deals. This decline reflects a more cautious investment climate, with capital deployed in a smaller number of larger transactions.

“Capital is concentrating in fewer deals, and investors are more selective than at any point in recent years, with a clear focus on assets that can deliver value through execution,” Kidd said.

Exit Challenges in Southeast Asia

The Bain report highlighted the issue of “exit overhang” in Southeast Asia, where investments are being held for longer periods as opportunities to sell remain limited. Singapore led the region with four exits in 2025, while exit value across Southeast Asia fell by approximately 32 per cent.

A survey included in the report found that exit conditions were the top concern among Southeast Asian investors, ahead of geopolitical tensions and challenging macroeconomic conditions. While some Southeast Asian investors expect positive returns over the next three to five years, a growing proportion turned pessimistic this year compared with 2024.