20.07.2022
The Burgeoning Growth of Data Centres in Asia Pacific
Written by Edward Cheak
Growth in the Asia Pacific market for Data Centres saw an expansion rate of 24% in 2021. The APAC market witnessed 185MW of new capacity across the region in Q4 and 1.500GW in 2021.EMEA also demonstrated strong growth of 500MW in Q42021, with a total aggregate supply of 1.582GW for the year, with a growth rate of 19%.
Credit and Political Risk Insurance can be a powerful tool for banks and liquidity providers in this fast-growing space to manage and mitigate a myriad of risks, such as credit risk, sectoral risk, country risk, political risk, and concentration risk. Banks can grow its’ business in an ambitious and prudent manner, alongside its’ insurance partners.
In APAC, the large centres of Tokyo and Shanghai added significant capacity in 2021, adding between 300MW to 400MW each to their respective markets. Chinese authorities had announced the establishment of up to four mega clusters of data centres in the north and west of the country. This was subsequently followed by a statement of a further ten national data centre clusters as part of the broader “Eastern Data and Western Computing” strategy.
In Southeast Asia, Singapore lifted the hold on new data centre builds after a two-year moratorium. Under a new pilot programme, up to 60MW of capacity will be made available in 2022, with developments of between 10MW to 30MW each.
The Data Centre market is broadly categorized into 3 segments; (i) Retail, (ii) Wholesale, (iii) Hyperscale, with power capacity in the ranges of (i) 3kW < 250kW; (ii) 250kW to 1MW and (iii) >1MW, with tenants of about (i) 100+, (ii) 10+ and (iii) 1-5.
Right before COVID emerged from the shadows and into our lives, work had begun on Facebook owner Meta’s data centre in Singapore. The 170,000sqm facility had USD 1 billion, with a power capacity of 150MW and will be Singapore’s largest hyperscale data centre.
The Dutch Pension investment company, APG had been looking to increase its allocation to the Data Centre sector, with a focus in South Korea, despite stiff competition. The New Zealand Superannuation Fund is also looking at possible large scale data centre investment in Asia. The AustralianSuper is also looking for similar investment opportunities including Asia.
According to CBRE, direct investment in the data centre sector in Asia Pacific totalled USD 4.8billion in 2021, more than double the previous of USD 2.2 billion in 2020, surpassing total investment volumes over the past four years. CBRE predicts transaction volume and fundraising activity to remain robust in 2022, data centres ranking as the most popular alternative investment for the third year running. Yields for a typical data centre in Tokyo had compressed from 5.75% in 2018 to 4.95% in 2021. In that same period, typical US data centre yields have compressed from 6.5% to 5%.
The current growth trajectory of the APAC Data Centre market is encouraging, and if the growth story continues, possibly in line with the growing adoption of technology in Asia, there should be plenty of opportunities in time to come. With a greater interest in this sector, one would expect a greater deployment of capital to this sector and region.
Texel Asia have seen a number of Data centre enquiries from Lenders, with assets in locations such as Australia, Singapore, Hong Kong and Japan and found strong insurance support and increasing structural and risk awareness as well as appetite from underwriters. Bank liquidity and insurance appetite look to be well met.
Keen to find out more? Drop us a note to find out more at asia@nullthetexelgroup.com.
Sources:
https://www.asianinvestor.net/article/global-investors-on-hunt-for-asian-data-centres/477777