,APAC

APAC data centre investment to reach another record this year

Nearly US$2b has already been invested in H1.

Data centre investment in APAC is set for a record year, with US$1.8 billion in direct data centre investments transacted in the first half of 2021, according  to the latest research from CBRE. 

Mainland China accounted for the highest proportion, with several major deals completed during the first six months. These included the acquisition of a 50% stake in Songjiang Internet  Data Centre in Shanghai by GLP and GDS’s purchase of a data centre in Beijing from CITIC  Group. 

Data centre transaction volumes hit a five-year high in 2020, due to accelerated digitalisation  as a result of the pandemic. With data centre investment in the first six months of 2021 reaching 80% of last year’s full-year investment, full-year data centre investment volume is  expected to surpass last year’s benchmark as further major transactions are due to close in the  second half of the year. 

Data centre demand in Asia Pacific is being driven by data security and sovereignty concerns, as governments tighten requirements around data storage. China’s Data Security Law, effective on 1 September, has prompted corporates to construct facilities to store all locally generated  data. Hyperscale cloud providers also added to expansion during H1 2021, with several major  corporations signalling new facilities and availability zones in Mainland China and Hong Kong  SAR. 

Opportunities remain in tier 1 markets in Asia Pacific, with total data centre net absorption in  Tokyo, Sydney, Singapore and Hong Kong slowing to 70 megawatts (MW) in H1 2021 from  123 MW in H2 2020. Overall vacancy in these markets edged up to 14.6% as of June 2021,  up from 13.9% in December 2020. 

“What we’re seeing now is a comfortable supply-demand situation as data centre operators  maintain a healthy vacancy rate of up to around 20% as a large buffer for expansion.  Operators only plan new developments when their existing assets are 60-70% occupied. A  facility with unsold capacity of 10% or less tends to be taken up by existing tenants rather than attracting new users,” said Lim Chin Yee, Senior Director, Asia Pacific Data Centre Solutions,  CBRE. 

Total colocation capacity in tier 1 markets across Asia Pacific stood at 1.876 gigawatts as of  June 2021, up 5.4% from December 2020 as more new projects are anticipated to come  online in the second half of the year. Tokyo has the largest pipeline among the four tier 1 Asia  Pacific data centre markets over the next three years. 

While investors can still be exuberant, the stabilised data centre supply is not currently available  to meet demand. Limited asset availability in the region is expected to somewhat temper direct data centre investments. “The main acquisition opportunities for investors will likely come from  some of the biggest data centre owners in the region: telecommunications companies seeking  to monetise their assets via sale and leaseback deals. While greenfield development is another  possible entry route, this remains dominated by data centre operators building their portfolios,” said Tom Fillmore, Director, Asia Pacific Data Centre Capital Markets, CBRE. 

“Due to the robust investor interest in this sector, we are also seeing participation through  indirect channels such as partnering with operators, providing project financing, or through  equity investments, such as Digital Edge’s acquisition of a majority stake in Indosat following  the relaxation of foreign ownership restrictions,” he added. 

 

Join Realestate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

Market yields are expected to see further compression for the remainder of the year.
The worst is already behind us, but rents won’t start picking up until 2022.
Thanks to foreign luxury brands’ resilience amidst the pandemic.
Rents of Grade A1 offices in the area grew 3% from May-July 2021. 
Prime high street rents slipped 0.3% in the same period.
Home sales declined 27% to 5,546 units during the month.
Most hotel operators have taken a long-term approach in the city and will open new sites in the coming years.
Major retailers such as Naiise, Dimbulah Coffee and Manekineko had to shut down their stores.
Less than 20% of the city's office supply obtained green certifications.
Compass Offices and Regus both expanded their spaces recently.
Nearly 7 in 10 of the units sold were in Gurgaon.
Only 200 new condominium units were completed in 2Q21, the lowest since 2015.