Data Center Construction Market in Japan Trends and Forecast
The future of the data center construction market in Japan looks promising with opportunities in the BFSI, IT and telecommunications, government and defense, and healthcare markets. The data center construction market is expected to reach an estimated $72.3 billion by 2031 with a CAGR of 5.8% from 2025 to 2031. The data center construction market in Japan is also forecasted to witness strong growth over the forecast period. The major drivers for this market are rising data usage and the increasing need for cloud computing among enterprises, growing dependence on e-commerce systems, which call for powerful data processing and storage capabilities, along the growing utilization of Internet of Things (IoT) devices.
• Lucintel forecasts that, within the data center category, large-scale data centers will remain a larger segment over the forecast period due to their ability to handle multiple clients and a variety of computing requirements.
• Within the end use category, IT and telecommunications will remain the largest segment due to the exponential rise in data consumption, increasing cloud adoption, and the expansion of digital infrastructure.
Emerging Trends in the Data Center Construction Market in Japan
The Data Center Construction market in Japan is growing rapidly due to several factors, including digital transformation, increased demand for cloud services, and higher computing power. Japan is the leading technology nation, and the need for high computing power and data storage and processing infrastructure has been increasing. The country is emerging as a hub for high-performance computing, an area essential to industries such as gaming, automotive, and finance. This is changing the market dynamics, creating new developments in data center infrastructure, and redefining the construction landscape in Japan.
• Hyperscale Data Centers Expansion: With the growing presence of global cloud providers in Japan, the demand for large-scale, hyperscale data centers is rising. These facilities scale easily to help large technology companies and industries benefit from cloud storage and services. With advanced cooling solutions and energy-efficient designs, developers are investing in state-of-the-art facilities that require high-density computing and storage. The impact of hyperscale data centers is bringing about a new future in JapanÄX%$%Xs data infrastructure, benefiting companies that can provide lightning-fast and reliable cloud services.
• Adoption of Green Building Standards: Environmental sustainability is becoming a major focus for data center construction in Japan. With rising concerns over energy consumption and carbon emissions, developers are incorporating green building standards into their designs. This includes using renewable energy sources like wind and solar power, optimizing energy efficiency, and reducing water usage for cooling systems. By prioritizing sustainability, developers not only meet government regulations but also address the growing demand for eco-friendly infrastructure. Green data centers are considered a prime competitive advantage in the Japanese market, aligning with both business and environmental goals.
• Growth in Edge Computing: Edge computing is on the rise in Japan as businesses and industries look to process data closer to the source. The rise of the Internet of Things (IoT), autonomous vehicles, and other latency-sensitive applications is driving the need for edge data centers. These smaller, decentralized facilities enable faster data processing and improved performance by reducing latency. The expansion of edge computing in Japan presents a significant opportunity for developers to create distributed networks that offer greater speed and reliability for services ranging from smart cities to industrial automation.
• 5G Infrastructure Development: The rollout of 5G networks in Japan is increasing the demand for data centers that can support the high-speed, low-latency connectivity required for 5G services. Data centers located near telecom hubs and fiber-optic networks are becoming critical to supporting 5G infrastructure. The increased demand for real-time processing of big data and video streaming, driven by the rise of connected devices, is prompting data center providers to optimize network capacity and lower latency. The growth of 5G will fuel significant investments in data centers designed to support the high-performance requirements of next-generation telecommunications.
• Government Regulations and Data Localization: Japan has implemented laws regarding data protection and privacy that have driven demand for localized data storage. As part of its efforts to protect consumer data, Japan requires certain data to be stored within the countryÄX%$%Xs borders. In this context, data center construction companies have a unique opportunity to build compliant facilities that adhere to local data sovereignty laws. Developers must focus on constructing data centers that meet both local and international standards, ensuring safe, compliant environments for the storage and processing of sensitive information.
Emerging trends in JapanÄX%$%Xs data center construction market include the expansion of hyperscale facilities, a focus on environmental sustainability, the advent of edge computing, infrastructure growth in 5G, and the localization of data storage requirements. These trends lead to a resurgence in demand for high-capacity, energy-efficient, and locally centered facilities, shaping JapanÄX%$%Xs data center market. Developers are tapping into these trends to build the infrastructure needed as cloud-based services, mobile services, and real-time applications continue to evolve, positioning Japan as a hub in the global data center market.
Recent Developments in the Data Center Construction Market in Japan
The Data Center Construction market in Japan is being influenced by transformations: the integration of new technological developments, the pressures of regulatory policies, and economies of scale—all of which continue to propel the industry forward. In this context, data center construction across Japan has gained momentum, driven by the demand for larger, more efficient, and sustainable infrastructure needed to support rising needs in cloud computing, edge computing, and 5G. Japan has taken the initiative in innovation, setting the stage for the future of digital infrastructure. This ensures that Japan will remain at the forefront of technological advancements worldwide.
• Government Initiatives and Investment in Infrastructure: The Japanese government is making investments in infrastructure to improve the country’s digital transformation. JapanÄX%$%Xs "Society 5.0" initiative is aimed at developing advanced digital infrastructures, including data centers, for technologies such as AI, IoT, and big data analytics. These initiatives help develop modern data centers to support the increasing demand for high-performance computing. Government support, in the form of tax incentives and financial assistance, encourages the growth of data center infrastructure.
• Energy Efficiency and Sustainability: As sustainability becomes a greater concern in Japan, data center developers are focusing on reducing their environmental footprint by adopting energy-efficient technologies. The integration of renewable energy sources such as solar, wind, and hydropower, as well as innovative cooling systems, is driving the construction of more sustainable data centers. Developers are increasingly prioritizing energy efficiency in line with JapanÄX%$%Xs environmental policies, meeting the country’s carbon reduction targets while creating cost-effective solutions for operators. Energy-efficient data centers also align with global trends toward green building practices.
• Advanced Cooling Solutions for High-Density Data Centers: As data storage needs grow, data centers are becoming increasingly dense, requiring advanced cooling solutions to manage the rising temperatures generated by high-performance computing equipment. Japan is witnessing the adoption of innovative cooling technologies such as liquid cooling and free cooling. These solutions are not only energy-efficient but also extend the life of the equipment. This focus on advanced cooling solutions allows for the development of high-density, high-performance data centers capable of meeting the demands of cloud computing, AI processing, and other data-intensive applications.
• Increasing Demand for Cloud Computing and Data Storage: The increasing dependence on cloud computing among businesses, governments, and citizens in Japan will drive the demand for data center infrastructure. The growing demand for data centers is driven by businessesÄX%$%X need for highly scalable, reliable, and secure data storage solutions on the cloud. Cloud service providers are looking to expand their operations in Japan, placing greater emphasis on high-capacity data centers that can host large volumes of data. The construction of data centers is accelerating to meet the needs of public and private cloud services, which are becoming more essential to JapanÄX%$%Xs digital economy.
• Strategic Locations for Data Center Construction: The strategic location of data centers is becoming a key consideration for developers in Japan. Proximity to telecom networks, fiber-optic infrastructure, and power grids is crucial to ensuring fast, reliable connectivity. Developers are also considering areas that are less prone to natural disasters, such as earthquakes and floods, which could affect the functioning of data centers. By selecting optimal locations, developers can provide more resilient and accessible services to clients, spurring growth in the data center construction market.
Recent developments in JapanÄX%$%Xs Data Center Construction market are driven by government initiatives, sustainability goals, growth in cloud computing, and the need for advanced cooling and strategic locations. These developments are reshaping the market, driving the construction of high-performance, energy-efficient, and strategically located data centers. JapanÄX%$%Xs focus on digital infrastructure, sustainability, and innovation positions the country as a leader in the global data center industry, helping businesses meet the growing demands of the digital age.
Strategic Growth Opportunities for Data Center Construction Market in Japan
The Data Center Construction market in Japan is fast evolving with growing interest in technological advancement, sustainability, and regulatory compliance. Japan’s leadership in global technology and the growing digital economy create an increasing demand for data centers, as these support all industries, from cloud computing to AI, where infrastructure needs to be developed to manage the ever-increasing volume and complexity of data. The market offers major growth opportunities across multiple applications, expected to transform the data center construction landscape in Japan.
• Expansion of Hyperscale Data Centers: Hyperscale data centers, providing immense storage and computing power, represent a major growth opportunity in Japan. With increasing demands for cloud services, AI, and big data analytics, hyperscale facilities will be the basis for supporting these industries, as they demand significant processing power and storage. Therefore, Amazon, Google, and Microsoft are investing a lot in hyperscale data centers in Japan, catering to the needs of not only local but also global clients. These massive data centers allow for more efficient handling of data and give businesses the ability to scale operations quickly, which is driving demand for larger, more complex facilities.
• Adoption of Sustainable Design Practices: Sustainability has become a central focus in the construction of data centers in Japan, driven by both consumer demand and regulatory pressure. The government is encouraging energy-efficient and eco-friendly designs through various incentives. To reduce energy consumption, data center developers use renewable sources of energy, such as wind and solar, and embrace water-cooling and advanced HVAC systems. Sustainable data centers are a competitive edge for the operators, who will ensure they meet Japan’s stringent environmental standards while reducing operational costs. This is part of global goals for carbon neutrality and positions Japan as a leader in sustainable infrastructure.
• Emergence of Edge Computing: Edge computing, a process where data is handled closer to the source, rather than centralized data centers, is gaining momentum in Japan. With the spread of IoT, autonomous vehicles, and real-time data processing, edge computing allows for faster processing of data and minimal latency. Data center developers are creating small, distributed facilities located near urban centers and key industrial hubs. These centers support applications that require low-latency processing, such as real-time video streaming and manufacturing automation. Growth in edge computing is transforming the traditional data center model and pushing developers to invest in decentralized infrastructures.
• 5G Network Expansion and Data Centers: The expansion of 5G technology in Japan creates new opportunities for growth in data centers. High-speed and low-latency demands are on the rise in telecommunications, healthcare, and entertainment industries. Data centers become necessary to facilitate the infrastructure support needed for the 5G services as massive data is sent over the network. Placing data centers next to 5G towers and hubs allows developers to offer more rapid services to customers. The increasing adoption of 5G is likely to fuel the need for more localized and high-capacity data centers, thereby boosting investment in this space.
• Government Regulations and Data Sovereignty: Japan’s regulatory environment is changing to respond to data privacy and security concerns. It opens new growth opportunities for local data centers, as government regulations, such as data sovereignty, require companies to store sensitive data within Japan’s borders. As demand for local data storage regulation compliance increases, the demand for local data centers also rises. Developers focus on building compliance-ready facilities, giving businesses a secure place to store and manage their data. The increasing regulation is motivating further investment in local data center infrastructure and security technologies.
The strategic growth opportunities in the Data Center Construction market in Japan are driven by hyperscale data center expansion, sustainability push, edge computing, 5G rollout, and evolving government regulations around data sovereignty. These factors are changing the market as they influence the design, scale, and location of data centers. As Japan continues to embrace technological innovation and sustainability, the data center construction sector is expected to grow further, making the country a significant player in the global digital infrastructure landscape.
Data Center Construction Market in Japan Driver and Challenges
The Data Center Construction market in Japan is influenced by several drivers and challenges that impact its growth. Technological advancement, the growing demand for cloud computing, concerns about sustainability, regulatory requirements, and the growing popularity of emerging technologies like AI and 5G are factors impacting the market. Challenges like high construction costs, environmental constraints, and regulatory compliance persist. This will help companies in investment decisions about data center infrastructure in Japan.
The factors responsible for driving the Data Center Construction market in Japan include:
• Technological Advancements: Rapid technological advancements such as cloud computing, AI, and big data analytics are considered the main driving forces behind Japan’s data center construction market. Their increasing adoption requires massive computing power and storage, which means that new data centers with efficient capabilities are necessary. Innovations in data processing and storage systems also contribute to the need for specialized data center infrastructure. As these technologies advance, data center developers are investing in cutting-edge solutions to support high-performance applications, allowing businesses to scale their digital operations in a competitive environment.
• Demand for Cloud Services: Demand for cloud services is one of the major drivers of data center construction in Japan. Cloud providers are expanding their infrastructure to support enterprises that increasingly rely on cloud computing for data storage, processing, and software solutions. With the rise of hybrid and multi-cloud strategies, businesses are seeking scalable, reliable, and secure cloud environments. The strong and growing demand for cloud services forces data center developers to design even larger and more specialized facilities than before, especially to satisfy cloud service providers. This drives significant new investments in new infrastructure.
• Emphasis on Energy Efficiency and Sustainability: Data centers have become an area of sustainability focus in Japan, driven both by increasing regulation and customer requirements to decrease their energy usage and consumption and reduce their negative impacts on the environment. The adoption of renewable energy, energy-efficient cooling systems, and eco-friendly building practices is driving the construction of more sustainable data centers. Companies are investing in energy-efficient technologies to reduce operational costs and meet environmental standards. This shift towards sustainability is influencing the design and construction of data centers, making it a key factor in the growth of the industry.
• Government Regulations and Data Sovereignty: An ever-changing regulatory environment is the driving force in Japan’s data center construction market. The laws governing data privacy, security, and sovereignty oblige companies to keep particular data types inside the borders of Japan. In return, it creates an increase in the demand for local data centers. As Japan’s data protection laws become more stringent, data center providers will have to invest in infrastructure that meets these requirements, opening up new avenues for growth in the sector. Regulatory compliance is shaping the design and construction of data center facilities in Japan.
• 5G Networks and Edge Computing: The expansion of 5G networks is transforming the data center construction market in Japan. 5G technology allows for faster, low-latency connectivity, which increases the demand for localized data centers that can support real-time data processing. Moreover, the growth of edge computing, which requires processing data closer to the source, is driving the construction of smaller, decentralized data centers. These facilities are designed to handle the high volumes of data generated by IoT devices, autonomous vehicles, and other real-time applications. As the adoption of 5G picks up, edge data centers are likely to remain in demand.
Challenges in the Data Center Construction market in Japan are:
• High Land and Construction Cost and Availability: High land cost and construction costs are the most critical challenges in Japanese data center construction. Japan is highly urbanized, which drives up the prices of land. Moreover, such densely populated cities leave little space for large data centers. Developers have to beat these challenges by optimizing space and looking for the second place that may possibly be in suburban or rural areas. Another issue is that high construction costs may prevent certain companies from investing in new data centers, particularly smaller players who cannot raise massive sums to finance large-scale projects.
• Environmental and Natural Disaster Risks: Japan’s propensity for natural disasters such as earthquakes, typhoons, and tsunamis poses risks for data center operations. Data center developers need to invest in resilient designs and technologies to limit the impact of such disasters. This includes earthquake-resistant structures as well as other natural events, plus disaster recovery plans and backup systems. The requirement for disaster-resistant data centers leads to construction difficulties in terms of cost and complexity of design.
• Shortage of Skilled Labor: The demand for constructing a data center is also placing stress on skilled labor in Japan. Engineers, technicians, and others specialized in data center design, construction, and operation are sought in large numbers. Companies face challenges in recruiting and retaining such qualified staff to match the increasing requirements of the sector. In this regard, training programs and partnerships with educational institutions are becoming more and more important in ensuring a steady pipeline of skilled workers in the data center construction sector.
The drivers of growth in Japan’s data center construction market such as technological advancement, demand for cloud services, sustainability initiatives, and government regulations are shaping the future of the industry. However, there is a need to address the challenge of high construction costs, risk of natural disasters, and shortages of labor. These drivers and challenges are reshaping the data center construction landscape, prompting innovation in design, sustainability, and resilience while creating opportunities for developers to build state-of-the-art infrastructure that meets the needs of a rapidly evolving digital economy.
List of Data Center Construction Market in Japan Companies
Companies in the market compete on the basis of product quality offered. Major players in this market focus on expanding their manufacturing facilities, R&D investments, infrastructural development, and leverage integration opportunities across the value chain. Through these strategies, data center construction companies cater to increasing demand, ensure competitive effectiveness, develop innovative products & technologies, reduce production costs, and expand their customer base. Some of the data center construction companies profiled in this report include:
• Company 1
• Company 2
• Company 3
• Company 4
• Company 5
• Company 6
• Company 7
• Company 8
• Company 9
• Company 10
Data Center Construction Market in Japan by Segment
The study includes a forecast for the data center construction market in Japan by size of data center and end use.
Data Center Construction Market in Japan by Size of Data Center [Analysis by Value from 2019 to 2031]:
• Small and Medium-scale Data Center
• Large-scale Data Center
Data Center Construction Market in Japan by End Use [Analysis by Value from 2019 to 2031]:
• BFSI
• IT and Telecommunications
• Government and Defense
• Healthcare
• Others
Features of the Data Center Construction Market in Japan
Market Size Estimates: Data center construction in Japan market size estimation in terms of value ($B).
Trend and Forecast Analysis: Market trends and forecasts by various segments.
Segmentation Analysis: Data center construction in Japan market size by size of data center and end use in terms of value ($B).
Growth Opportunities: Analysis of growth opportunities in different size of data centers and end uses for the data center construction in Japan.
Strategic Analysis: This includes M&A, new product development, and competitive landscape of the data center construction in Japan.
Analysis of competitive intensity of the industry based on Porter’s Five Forces model.
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FAQ
Q1. What are the major drivers influencing the growth of the data center construction market in Japan?
Answer: The major drivers for this market are rising data usage and need for cloud computing among enterprises, growing dependence on e-commerce systems, which calls for powerful data processing and storing capacities, along with increasing utilization of the internet of things (IoT) devices.
Q2. What are the major segments for data center construction market in Japan?
Answer: The future of the data center construction market in Japan looks promising with opportunities in the BFSI, IT and telecommunications, government and defense, and healthcare markets.
Q3. Which data center construction market segment in Japan will be the largest in future?
Answer: Lucintel forecasts that large-scale data center will remain the larger segment over the forecast period because they are designed to handle several clients and a variety of computing requirements.
Q4. Do we receive customization in this report?
Answer: Yes, Lucintel provides 10% customization without any additional cost.
This report answers following 10 key questions:
Q.1. What are some of the most promising, high-growth opportunities for the data center construction market in Japan by size of data center (small and medium-scale data center and large-scale data center) and end use (BFSI, IT and Telecommunications, government and defense, healthcare, and others)?
Q.2. Which segments will grow at a faster pace and why?
Q.3. What are the key factors affecting market dynamics? What are the key challenges and business risks in this market?
Q.4. What are the business risks and competitive threats in this market?
Q.5. What are the emerging trends in this market and the reasons behind them?
Q.6. What are some of the changing demands of customers in the market?
Q.7. What are the new developments in the market? Which companies are leading these developments?
Q.8. Who are the major players in this market? What strategic initiatives are key players pursuing for business growth?
Q.9. What are some of the competing products in this market and how big of a threat do they pose for loss of market share by material or product substitution?
Q.10. What M&A activity has occurred in the last 5 years and what has its impact been on the industry?
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