Unlocking High-Growth Opportunities in the Philippines Data Center Market (2026–2031): Cost-Effective Wholesale Colocation and Cloud-Driven Infrastructure Expansion

The Philippines data center market is poised for explosive growth, with a projected compound annual growth rate (CAGR) of 22.50% from 2025 to 2031, expanding from USD 735 million in 2025 to USD 2.48 billion by 2031. This trajectory is driven by rapid digital transformation, surging demand for AI and cloud services, and the country's emergence as a cost-effective hub for data infrastructure. For investors, the shift from retail to wholesale colocation, fueled by cloud migration and global entrants like Alibaba Cloud and Equinix, presents a compelling opportunity to capitalize on this high-growth market.

Manila's Dominance and Competitive Infrastructure Costs

Manila remains the epicenter of the Philippines' data center boom, hosting 20 active facilities and several upcoming projects. The city's strategic location in Southeast Asia, coupled with its expanding subsea connectivity and government incentives, has attracted both local and international investors. A critical factor in the Philippines' appeal is its cost-competitive infrastructure: building a data center here averages $6.5–$7.5 million per megawatt (MW), significantly lower than in other regional hubs. This affordability, combined with the country's political stability and English-speaking workforce, positions Manila as a prime destination for hyperscale and enterprise investments.

The Retail-to-Wholesale Colocation Shift

The market is undergoing a structural transformation as enterprises migrate workloads to the cloud, reducing reliance on retail colocation services. While retail colocation dominated in 2025, wholesale colocation is gaining momentum, driven by the need for scalable, cost-efficient infrastructure to support cloud and edge computing. This shift is amplified by the Philippines' National Cloud First Policy, which mandates public agencies to prioritize cloud-based solutions. As a result, demand for wholesale colocation-where large-scale providers lease space for extensive infrastructure-is surging, creating a fertile ground for global players to expand.

Global Entrants: Alibaba Cloud and Equinix Lead the Charge

Alibaba Cloud and Equinix are at the forefront of this expansion. In July 2025, Alibaba Cloud announced plans to open its second data center region in the Philippines, following its initial investment in the country. This move aligns with the broader trend of cloud providers securing local infrastructure to meet rising demand for low-latency services in Southeast Asia. Meanwhile, Equinix has aggressively expanded its footprint by acquiring three carrier-neutral data centers in Manila-MN1, MN2, and MN3-from Total Information Management (TIM) in 2025. These facilities, offering over 1,000 cabinets of capacity, are integrated into a robust ecosystem that connects Philippine businesses to 10,000+ global networks, cloud providers, and AI services via Equinix Fabric.

Equinix's investments are not just about scale but also about enabling digital innovation. The company has partnered with AI leaders like NVIDIA and HPE to support AI-driven infrastructure development in the region. This strategic alignment with cutting-edge technologies underscores the Philippines' potential to become a regional AI and cloud hub.

Strategic Advantages and Future Outlook

The Philippines' growth is further bolstered by its role as a gateway to Southeast Asia. With a digital economy valued at $45 billion in 2024-8.5% of GDP-the country is a key player in the region's digital transformation. Additionally, the government's focus on improving energy reliability and streamlining regulatory processes for foreign investors enhances the market's attractiveness. For investors, the combination of low MW costs, strategic location, and a supportive policy environment creates a unique opportunity to participate in a market projected to grow at one of the highest CAGRs in Asia.

While some reports project slightly lower CAGRs (e.g., 6.5–7.5% from 2024–2035), these discrepancies often stem from varying timeframes and methodologies. The core drivers-cloud adoption, AI growth, and cost efficiency-remain consistent across analyses, reinforcing the Philippines' long-term potential.

Conclusion

The Philippines data center market is a high-conviction investment opportunity, driven by a confluence of cost advantages, cloud migration, and global infrastructure expansion. As Manila solidifies its position as a regional digital hub and wholesale colocation demand accelerates, early movers like Alibaba Cloud and Equinix are setting the stage for sustained growth. For investors seeking exposure to a market with a 22.5% CAGR and a clear path to scalability, the Philippines offers a compelling blend of strategic value and economic pragmatism.