Market Trends of New Zealand Data Center Construction Industry
Tier 3 is the Largest Tier Type
- Tier 1 and Tier 2 facilities are losing demand due to their inability to meet the growing uninterrupted business services. A growing number of global companies are creating business continuity services and are gradually shifting priority to Tier 3 and 4 data centers.
- The Tier 3 sector in the New Zealand data center market reached an IT load capacity of 47.03 MW in 2022 and is expected to register a CAGR of 5.63% to reach a capacity of 69.03 MW by 2029. Increased investments in the building affect data center infrastructure and technological advancements. It is expected to create lucrative opportunities for market growth by 2029.
- Tier 4 data centers are expected to be the fastest-growing segment, with a CAGR of 31.53%. The segment amounted to just 2 MW in 2022 and is expected to touch 13.62 MW by 2029.
- Pandemic-led demand for video conferencing, online schooling, entertainment, social networking, and platforms to support remote working led to a 47% Y-o-Y surge in global internet traffic in 2020, eclipsing initial forecasts of 28%. These services need data center facilities with 24/7 support, which Tier 3 and 4 facilities can offer.
- Other major demand drivers include global technology services companies catering to growing corporate requirements for remote working and other virtual arrangements. The wider adoption of 5G and further digitalization of healthcare and other government services will be the primary demand drivers of Tier 3 and Tier 4 data center growth within Asia-Pacific.
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Telecom is Expected to Hold the Highest Market Share
- Introducing the 5G network in New Zealand in March 2021 will likely increase data center investments. Vodafone and Spark have already launched a 5G network. According to Opensignal, Vodafone customers with a 5 G-enabled device and subscription had an active 5G connection of 3.9% of the time compared to Spark, which had an active connection of 2.9% of the time.
- Telecommunications methods have changed over the years, and New Zealanders need reliable telecommunications services for many aspects of their daily lives. The proportion of active internet users has increased overall in line with global trends, supporting the country's ongoing digital transition. The Ultra-Fast Broadband Initiative is a New Zealand government program to build a fiber optic network covering 87% of the population by the end of 2023. It is a public-private partnership between the government and four companies, with a total government investment of NZD 1.7 billion.
- The broadband market is experiencing slow growth, driven primarily by new building construction in greenfield developments or urban renewals. The UFB government project reached over 1.7 million facilities and connected 63%, or 1.1 million. Fixed broadband subscribers are expected to increase due to an increase in households and a decrease in the number of underserved facilities that were previously unconnected. This drives the adoption of data centers in the telecom industry in the country.
