Vietnam offers some of the lowest data center construction costs in Asia, ranging from US$5.5 million to US$8.4 million per MW, according to Cushman & Wakefield.

The real estate firm's Asia Pacific Data Center Construction Cost Guide 2025, conducted across 90 data center development clusters in 26 cities, found that the average construction cost in Vietnam is $6.9 million per MW, an increase of 3.5% year-on-year. In particular, electrical systems account for 26% of the total cost, while mechanical and civil systems make up 13%.

Vietnam has 27 data centers throughout the country. Photo: VNG

Additional costs include cooling systems, safety and fire protection, security, racks, cabinets, equipment and cabling. Land costs account for 5% of the total expenditure, at a median price of $209 per square meter in suburban areas with pre-built infrastructure in Ho Chi Minh City and Hanoi.

This cost is slightly higher than Taiwan's average standard of $6.4 million per MW, but significantly lower than neighboring countries.

Japan leads the Asia-Pacific region with the highest construction costs at over $13.2 million per MW, followed by Singapore ($11.7 million) and Australia ($9.6 million).

Trang Bui, Country Head of Cushman & Wakefield, noted that Vietnam has significant potential to become a major data market in the region due to competitive construction costs and land prices, as well as its strategic location. This is evidenced by the interest of international players such as Apple, Intel, Canon, Samsung, LG, LEGO, and Airbus, who are beginning to collaborate with local partners on digital transformation strategies, she added.

"Increased transparency, openness to foreign investment, and regulatory reforms will create more opportunities for international investors and accelerate the growth of this sector," Trang said.

Challenges facing the data center market

Despite its potential, the country's data center market faces significant challenges that need to be addressed, according to Cushman & Wakefield's country head. One of the biggest obstacles is ensuring a stable power supply, which is crucial for data center operations. Power outages are common as the national grid struggles to meet peak demand. The government is working to add about 6.6 GW of power capacity, but this process may take several years to complete.

In addition, complicated legal regulations and bureaucratic procedures pose significant barriers, making it difficult to obtain the necessary permits in Vietnam. The availability of skilled workers to build and operate data centers remains limited, especially those capable of handling large-scale industrial projects.

Viettel's new data center at Hoa Lac Hi-tech Park. Photo: Viettel

As of 2024, Vietnam has 51 MW of operational data center capacity, with an additional 11 MW under construction and a projected 28 MW in the future. Currently, Ho Chi Minh City accounts for 50% of the country's operational capacity, which is primarily dominated by local telecom providers.

This landscape is set to change as the government unveils the Telecommunications Law, which aims to streamline processes and lift foreign ownership restrictions for data providers. These exemptions are expected to attract more international operators, the report points out.

ST Telemedia Global Data Centers recently announced a joint venture with VNG Corporation, while Viettel is working with Singtel to develop an undersea cable connecting Vietnam to Singapore and other Southeast Asian countries. Moreover, China's Alibaba and South Korea's Hyosung Corporation have recently expressed interest in developing data centers in Ho Chi Minh City.

The Vietnamese Government has launched the National Data Center project to enhance the security of data storage amid the region's strong digitization in the public sector. During a special policy dialogue at the World Economic Forum in Davos on January 21, Prime Minister Pham Minh Chinh said Vietnam aims to complete the project by June 2025.

These efforts are expected to boost the development of pioneering businesses and expand the capacity of data centers across the country.