KUALA LUMPUR (Feb 11) — Malaysia has not recorded any postponements, cancellations or relocations of data centre investments due to water supply limitations as of January 2026, according to the Ministry of Investment, Trade and Industry (Miti).
In a written parliamentary reply, the ministry said authorities are taking steps to ensure that the rapid expansion of data centre projects proceeds in a structured and sustainable manner. A key priority is safeguarding adequate water resources while also identifying alternative and more environmentally sustainable solutions to support long-term operations.
Among the approaches being explored is immersion cooling technology, developed in collaboration with global technology partners. This method uses specialised liquids to absorb heat directly from servers, significantly reducing or even eliminating the need for water in core cooling processes.
Miti was responding to a question regarding whether foreign direct investment in the data centre sector had been affected following Johor’s decision to temporarily defer approvals for new facilities until 2027 due to water supply constraints. The ministry emphasised that proactive planning and integrated infrastructure management are helping maintain investor confidence.
Officials also noted that Malaysia aims not only to attract data centre investments, but to position itself as a competitive regional digital hub capable of balancing industrial growth with environmental responsibility.
The continued expansion of the digital infrastructure sector has broader implications for the real estate market. Data centres, logistics hubs and advanced manufacturing facilities are driving sustained demand for industrial land in Selangor, particularly in well-connected corridors where power, fibre connectivity and transport infrastructure are readily available.
At the same time, supporting industries and technology firms are increasingly seeking industrial property in the Subang area and factory space in Puchong, locations that benefit from proximity to major highways and established business ecosystems.
In parallel, the growth of technology and professional services companies continues to support demand for office space in Bukit Jalil and other emerging business districts, while investors remain active in commercial property in KL, where connectivity, workforce access and integrated developments remain key decision factors.
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