According to the latest CBRE research, the rapid surge in data demand, fueled by continued growth in cloud computing and social media use, is driving increased investor interest in Asia Pacific data centres, with investment in the sector soaring to record levels in 2021.
Direct investment in the APAC data centre sector totaled $4.8 billion in 2021--more than double the previous high of $2.2 billion in 2020 and surpassing investment volumes for the past four years combined. Transaction volume and fundraising activity is expected to remain robust in 2022, with data centres ranking as the most popular alternative investment for the third consecutive year in CBRE's recent survey of real estate investor intentions.
Interest in the sector has been underpinned by demand from hyperscale cloud providers for bigger facilities and multiple-site deployments. There were several large portfolio deals in APAC in H2 2021, including DigitalBridge-backed Vantage Data Centers' purchase of PCCW's data centre portfolio in Kuala Lumpur and Hong Kong, and the acquisition of five data centres in Japan by Digital Edge and Stonepeak Infrastructure.
"There is a considerable amount of capital looking to gain exposure to data centres as investors' understanding of the sector matures. We have already seen strong growth in recent years and the pandemic-driven digitalization trend has really supercharged interest in the sector. While opportunities will be limited relative to the demand that we are seeing, investors are pursuing the operational route by setting up dedicated platforms to secure higher returns," said Tom Fillmore, Director of Asia Pacific Data Centre Capital Markets for CBRE.
Vacancy was stable at 14% for Asia Pacific's Tier 1 markets of Greater Tokyo, Singapore, Sydney and Hong Kong SAR, despite record supply of 305MW in H2 2021. Almost 2,100MW of supply is slated to be completed by 2024, with Sydney constituting 40% of the pipeline. The new additions place Sydney on track to become the region's largest colocation market by 2024 in terms of data centre capacity.
Key report findings: