BlackRock Foresees Significant Growth in Asian Infrastructure Driven by AI Boom

BlackRock Inc., the world's largest asset manager, is anticipating substantial growth in Asia's infrastructure sector, driven by the burgeoning demand for artificial intelligence (AI). According to Brad Kim, BlackRock's head of Asia-Pacific diversified infrastructure, the need for data centers in the region is expected to double over the next five years, surpassing current market capacities.

The AI boom is not only driving the demand for data centers but also significantly increasing the need for energy and water infrastructure. Kim highlighted that water infrastructure will need to almost double in the next five years, primarily to support the cooling mechanisms required by data centers. Additionally, overall energy consumption across the Asia-Pacific region is projected to increase by about 50% over the next decade.

Surging Energy and Water Demand

The surge in electricity demand is outpacing the available power supply in many parts of the world, leading to concerns about power outages and price increases, especially in regions with high data center density. In Asia, tech giants such as Amazon Inc. and Microsoft Corp. are securing long-term power contracts to support their data centers, which are essential for AI operations.

Southeast Asia has been a focal point for recent investments, with these tech companies pledging billions of dollars to build new data centers in the region. However, despite this growth, Asia still lags behind other global regions in terms of infrastructure investment, requiring an estimated $1.7 trillion annually until 2030 to maintain its growth momentum, according to the Asian Development Bank.

Infrastructure Investment Gap

While government reforms could address up to 40% of the region's infrastructure gap, the remainder will need to be filled by the private sector. BlackRock, in its capacity as a major investor, has already committed to raising $30 billion for AI investments in partnership with Microsoft, with most of these funds allocated to US locations. Additionally, Google has partnered with BlackRock to procure up to 300 megawatts of solar energy from Taiwans New Green Power, a company within BlackRocks portfolio.

Charlie Reid, co-head of Asia-Pacific climate infrastructure at BlackRock, noted that 'every client we speak to is interested in investing in infrastructure, specifically energy transition and digital related infrastructure.' He emphasized the convergence of investment opportunities between these two themes.

Investment Opportunities and Partnerships

BlackRock's commitment to AI infrastructure is part of a broader strategy to mobilize private capital for building data centers and supporting power infrastructure. The firm has launched a new AI partnership with Global Infrastructure Partners, Microsoft, and MGX, aiming to unlock $30 billion of private equity capital and potentially mobilize up to $100 billion in total investment, including debt financing.

This initiative underscores the significant investment potential in AI-driven infrastructure, highlighting the multi-trillion-dollar long-term investment opportunities in this sector.