Data Center
KTAs from Meeting with JLL: Demand Spillover Thesis Supported; Land, Power, Water are Key
- Our demand spillover thesis is further supported by project pipelines and potential moratoriums in Malaysia and Thailand.
- Indonesia’s power supply is ample, but substation remains the bottleneck, prompting PLN's 2GW substation plan by FY28-29.
- Power and water remain key site-selection factors; Price in key industrial land has also re-rated sharply due to DC-driven demand.
Opportunity exists, but bottlenecks remain
JLL flagged demand inquiries of up to 2GW for Indonesia's Data Center (DC) industry, against Greater Jakarta's live operational capacity of just 400MW as of 2025. On the other hand, the spillover thesis is further supported by potential moratoriums in Malaysia and Thailand. Notably, JLL was explicit that the binding constraint is not raw power generation but substation connection/distribution, prompting PLN's plan for new substations in Karawang, Purwakarta, and Subang (2GW combined), targeting RFS by FY28-29. Looking ahead, site selection should extend beyond Greater Jakarta toward Central and East Java to diversify blackout risk, though power distribution remains the key risk.
Power and water are also key considerations
Rising AI workload is pushing power rack density sharply higher, from 5-10kW/rack in traditional colocation to 30-40kW for GPU and 60-100kW for liquid-cooled AI racks. This has fueled discussion around a potential PLN tariff hike for DCs, though Indonesia's electricity cost is still expected to remain competitive against regional peers, with the >30MW tariff at Rp997/kWh vs. US$0.11/kWh in Malaysia and US$0.18/kWh in Singapore. On water, a single AI DC can require 6,000-15,000m³/day, which is the core reason AI hyperscale sites cluster inside industrial estates operating their own water treatment plant (WTP).
Land price re-rated; Power remains the feasibility driver
Strong demand from DCs has also pushed up land prices, with Deltamas land reportedly rising from Rp4.2mn/sqm to Rp8.5mn/sqm within roughly a year, underpinned by investment in switchgear and substation infrastructure. Industrial estates remain the preferred location given plug-and-play power access and estate-owned WTP, while proximity to the sea, embassies, fuel stations, and flight paths remain key site exclusions. That said, land still accounts for only a small share of total investment cost (~10-15% of a DC's capex) at AI-hyperscale scale, meaning power access, remains the true determinant of project feasibility and scale.
Remain positive on the theme, but key risks will separate the winners
We remain positive on the data center theme (our pick ISAT, Buy, TP3,430) given its structural and visible demand progression, though several critical risks must be carefully assessed to determine the clear winners. Key risks are rapid GPU technology obsolescence and evolving regulatory risks, which warrant close monitoring.
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