According to CBRE, a real estate investment company, the amount of data center investment in Asia Pacific last year was the largest in the past five years. This is the result of accelerated digitalization due to the pandemic. Investment continued this year. Data center investment in the first half of 2021 will amount to 80% of the total investment last year. As investment will continue in the second half of the year, the total investment in 2021 is expected to greatly exceed the figure of last year.
CBRE analyzed that the need for data centers in the Asia-Pacific region is growing due to concerns about data security and loss of control. Recently, governments in the Asia-Pacific region have tightened regulations on data storage. A typical example is China’s data protection law, which came into effect on September 1. The law requires companies to have facilities to store all data generated in China.
Indeed, China is at the center of data center investment. This is where the most investment takes place in the Asia-Pacific region. Major investors in the first half of this year include Singaporean investment company GLP, which acquired a 50% stake in Songjiang Internet Data Center in Shanghai, China, and Chinese cloud and data center company GDS, which acquired Beijing-based CITIC Group’s data center. made in China
Meanwhile, hyperscale cloud service providers are expanding their services in the first half of 2021. Major companies have hinted at the possibility of setting up new facilities in China and Hong Kong.
CBRE analyzed that although the establishment of new data centers is decreasing in Central and East Asia, there is still room for new data center infrastructure to be built to expand the market. In particular, we anticipate that there are still opportunities in the Asia Pacific Tier 1 market.
Opportunities still remain
First, looking at the total data center net absorption in Tokyo, Japan, Sydney, Singapore, and Hong Kong, it decreased from 123 megawatts (MW) in the second half of last year to 70 MW in the first half of this year. The total space remaining in the Tier 1 market also increased from 13.9% in December last year to 14.6% in June this year.
However, during the same period, the total colocation capacity of the Asia Pacific Tier 1 market was 1.876 gigawatts (GW) as of June this year, up 5.4% from December last year. It is believed that the increase was due to new businesses expected in the second half of this year. CBRE forecasts that Tokyo will grow the most over the next three years among Tier 1 markets.
Chinye Lim, Senior Director of CBRE Asia Pacific Data Center Solutions said, “Due to the expansion of investment, data center operators have maintained a healthy vacancy rate of 20% and supply and demand has stabilized.” He explained that he was not satisfied, and that direct investment could be strengthened if the available assets in the region were limited.
Chinye Lim added, “When the vacancy rate is 30-40%, data center companies try to attract new customers, but when the vacancy rate is about 10%, only existing customers use them, but they cannot attract new users.”
Direct investment reinforcement is shown in the form of mergers and acquisitions. “Mergers and acquisitions can happen around the companies that own the largest data centers in the region,” said Tom Fillmore, director of data center capital markets for CBRE Asia Pacific. The most likely is a mobile communication company that is trying to monetize data by selling or leasing it. There is a way to build a new data center, but at present, these investments are being led by data center companies according to the company’s portfolio strategy.”
As such, since investment in the data center field is very active, an indirect way to approach the data center industry is also emerging. These include partnerships with data center companies, project financing, and equity investments. For example, Singapore data center company Digital Edge acquired a stake in mobile operator Indosat after Indonesia’s foreign ownership restrictions were eased.
Earlier this year, market research firm Frost & Sullivan predicted that global investment in data center infrastructure would exceed $26 billion by 2025. The scale of data production is growing out of control, but the supply is limited.
Frost & Sullivan predicts that IT and manufacturing companies will accelerate the growth of the global Data Center Infrastructure Solutions (DCIS) market as IT and manufacturers invest in next-generation businesses, cloud and co-location data centers. [email protected]
Source: ITWorld Korea by www.itworld.co.kr.
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