CapitaLand buys $757.7mn hyperscale data centre in China
CapitaLand, a Singaporean investment firm, has purchased its first hyperscale data centre in China. This morning, the company announced that it has to acquire a 55 MW capacity, 75,000 square metre facility in Shanghai.
The data centre has been bought out from two Chinese firms and the acquisition is expected to be completed in Q3 of this year.
The 55 MW campus comprises four buildings with a combined floorspace of 75,000sqm - Courtesy of CapitaLand Group
Real estate companies have woken up over the past few years to the possibilities of data centres as digital infrastructure investments. Despite high initial CapEx barriers to entry, a from November of 2020 noted that, “Whilst Covid-19 has brought data centres in the spotlight this year, investors interest for the sector has been growing over the past five years,” with the authors explaining that “The fundamentals of the sectors are strong and solid with a flourishing demand set to grow dramatically in the next five years.”
CapitaLand has been in the data centre business for a number of years itself, and owns four data centres in Singapore, 11 in Europe, and it is the fund and asset manager for the development of a data centre in Korea.
However, this latest purchase represents the company’s first data centre in the Chinese market. Although CapitaLand has been operating in China since 1994, the company has so far constrained its operations to the commercial, retail and business development sectors - where its portfolio numbers some 200 properties in over 40 cities.
The Chinese data centre market is the second-largest in the world, after the US, and the largest in APAC. This first purchase, according to He Jihong, Chief Executive Officer of the CapitaLand Group’s Data Centre subsidiary, is representative of where the firm is headed. “We will leverage our existing local expertise and networks to further grow our data centre portfolio. In addition to acquiring operating assets, we have the capability to develop data centres on greenfield sites and acquire brownfield projects, drawing on CapitaLand Group’s ecosystem of capital and business partners,” she said in a statement to the press earlier on Wednesday.
She added: “For example, in China we are exploring opportunities with established partners such as AVIC Trust to invest more in this sector.”
Puah Tze Shyang, CEO of CapitaLand’s Chinese operations, added that the company’s "entry into the data centre market in China will further diversify our portfolio across asset classes and build more operating capabilities.”
He continued, noting that the purchase is in line with the group’s strategy to pivot it’s Chinese portfolio towards “new economy assets” in the market. “We see strong potential to expand our data centre portfolio in cities such as Shanghai, Beijing, Shenzhen and leverage our growing base of new economy assets to bolster our fund management business in tandem,” he said.
Equinix: Digital leaders expect changes to working patterns
A global report released by Equinix has revealed that digital leaders expect long-term changes to the way people work.
As part of the report, the data infrastructure company surveyed 2,600 IT decision-makers from several different businesses spanning 26 countries in the Americas, Asia-Pacific and EMEA regions. The study also highlighted the biggest technology trends affecting global businesses and how the COVID-19 pandemic has impacted digital infrastructure plans.
Talking about companies’ expansion strategies, Claire Macland, Senior Vice President of Global Marketing at Equinix, said: “Many companies are now investing more in their digital infrastructure to enable them to embrace a hybrid working model and thrive in the new world of work we all find ourselves in.
“Despite headwinds in many sectors, many organizations are continuing to expand physically and virtually into new markets and regions around the world”, she said.
The report drew the following conclusions:
- 64% of the 2,600 digital leaders surveyed believed there will be “long-term changes to both how and where people will work in the future.
- 57% of global companies intend to expand into new regions despite the effects of the pandemic
- 51% of businesses worldwide say they have rearchitected their IT infrastructure so that it can meet the demands of remote and hybrid working. Digital transformation has also been accelerated due to an increase in businesses’ technology budgets.
How might digital transformation be affected post-pandemic?
COVID-19 has demanded that companies make several changes to the way that they operate, including digital transformation. According to the study, 47% of those surveyed reported that they have accelerated their digital transformation plans because of the Coronavirus pandemic. A further 42% of organisations said their budgets have increased to keep up with the growth of digital transformation.
Another change in adapting to the pandemic was to businesses’ IT strategies with six in 10 companies saying that it has been revised in response to the situation. 58% said they are looking to invest in technology to “improve agility’ post-COVID.
When asked about their priorities for their digital strategy, 80% of respondents said that digitising their infrastructure was of utmost importance, while 57% viewed interconnection as a ‘key facilitator’ of digital transformation.
"This increasing focus on digitization and expansion is one of the reasons why Equinix has continued to invest in its own growth. We completed 16 new expansions in 2020—our most active build year ever—and expect to continue to evolve Platform Equinix to support our customers as they continue on their digital transformation journey”, said Claire Macland.
Potential concerns disperse over expansion plans being halted by COVID-19
The study has also revealed that organisations’ previous concerns that the pandemic will negatively affect their business expansion plans have been lessened.
57% of businesses have said that they “still have plans” to expand into new regions and of that percentage, nearly two-thirds (63%) plan to do so virtually instead of investing in physical IT infrastructure.
The full Equinix report can be found here.