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Hong Kong Data Center Stands Firmly in the Market

Redaksi | Selasa,22 Juni 2021 - 01:42:50 WIB
Dibaca: 268 kali 
Hong Kong Data Center Stands Firmly in the Market

Ranks the third most attractive data center location in APAC
Land supply increase through HSITP in the Lok Ma Chau Loop advisable

  • Pandemic and geopolitical tension exert little impact on the market position of Hong Kong's data center. Hong Kong advances to the third most attractive data center location in Asia Pacific this year
  • Shorten the time gap between power capacity expansion work and data center delivery, streamline and accelerate the approval of data center applications and procedures by relevant government departments are recommended
  • Increase data center land supply and enhance Hong Kong-Shenzhen collaboration through Hong Kong-Shenzhen Innovation and Technology Park (HSITP) in the Lok Ma Chau Loop

HONG KONG SAR - 22 June 2021 - Global real estate services firm Cushman & Wakefield reveals today that while pandemic and geopolitical tensions have impeded the development of data centers in multiple markets around the world, Hong Kong's data center market still stands out firmly. Hong Kong advances to the third most attractive data center location in Asia Pacific and is highly sought after by investors and operators.

Data center investment market in Hong Kong has remained robust despite the pandemic. Early in the year, Mapletree Investments acquired a site in Fanling at HK$813 million to debut their local data center construction project in Hong Kong, which is expected to complete by 2023. Established operators such as PCCW, Equinix and SUNeVision also continue on their new data center facilities, and mainland operator GDS has kicked off their first owned data center project in Kwai Chung, expected to complete in mid-2022.

The cable infrastructure in Hong Kong has increasingly strengthened and been extensive and further fibre connectivity will soon link Hong Kong to other regional locations. For example, the Asia Direct Cable (ADC) is scheduled to go live by the end of 2022, with no fewer than eight major telecommunications firms providing capital and know-how for the 9.400-kilometre system. The cable will link Hong Kong to Japan, the Philippines, mainland China, Vietnam, Thailand, and Singapore. Also coming online next year is the Southeast Asia-Japan Cable 2 linking Hong Kong to South Korea, Japan, mainland China, Taiwan, Vietnam, and Thailand. The China Mobile Mobile-backed Hainan to Hong Kong Express cable will link Hong Kong to Hainan and Zhuhai, with operations commencing this year. Cushman & Wakefield expects that the Hong Kong data center market will continue to flourish in the future, with investor interest and absorption remaining at a relatively high level.

As of end-1Q21, total data center stock in Hong Kong amounts to 8.38 million sq ft, of which 80% is dominated by 10 operators including the two largest (in terms of total floor area) local operators – SUNeVision and PCCW Solutions, which account for 30% of the market area. Non-local operators collectively occupy around 43%. Existing data center demand is supported by finance, banking, insurance, and telecom operators. With growing use of Internet of Things (IoT), 5G network, and cloud computing, as well as the post-COVID-19 working from home practice becoming a "new" normal, the market demand for cloud computing and storage surge rapidly. Cushman & Wakefield expects the future demand of data center be largely driven by leading global cloud service providers such as AWS, Microsoft Azure, Google Cloud, Tencent Cloud, and Alibaba Cloud.

Cushman & Wakefield anticipates 4.16 million square feet of data center supply by the end of 2025, yet the rate of construction has yet to meet the ever-rising demand for high-tier facilities. Mr Keith Chan, Cushman & Wakefield's Head of Research, Hong Kong, commented, "We notice that about 86% of the upcoming supply has already been pre-committed by data center operators, leaving only a small fraction of space available for future demand. In Hong Kong, it generally takes at least three to four years to build a new data center. Therefore, we expect data center supply is still in short in the medium term".

Power shortages present another bottleneck in supply. The existing 11kV power supply network cannot meet the substantial power demand of hyperscale data centers. It usually takes power companies about four years to provide the additional power supply with 132kV power transformers, creating a gap of 18 to 24 months between the target commencement date of data center operations and delivery of the necessary power supply. Cushman & Wakefield recommends the government and power companies to swiftly explore and coordinate on how to increase power supply capacity and shorten power delivery timelines to ensure the infrastructure is in place for future development of data center in Hong Kong.

Shortage of land supply remains one of the critical challenges to the future growth of the Hong Kong's data center market. Mr John Siu, Managing Director, Cushman & Wakefield, Hong Kong mentioned, "In response to the shortage of land catered for data centers, the government may consider collaboration with Shenzhen at the Hong Kong-Shenzhen Innovation and Technology Park (HSITP) located in the Lok Ma Chau Loop for joint development of data center facilities for the Greater Bay Area. Besides, the government should also streamline the coordination across different departments, and accelerate the application and approval process of the works required for data center development and reconstruction."

About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 50,000 employees in over 400 offices and 60 countries. Across Greater China, 22 offices are servicing the local market. The company won four of the top awards in the Euromoney Survey 2017, 2018 and 2020 in the categories of Overall, Agency Letting/Sales, Valuation and Research in China. In 2020, the firm had revenue of $7.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services.

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