SINGAPORE, 11 October 2018 – Cushman & Wakefield's latest edition of Winning in Growth Cities Report 2018-2019 shows that Singapore's data centre (DC) market was a hot favourite amongst investors in APAC in the 12- month period up to Q2 2018. The data centre hub drew close to 40 per cent of the total real estate investment in data centres across the region.
Comparing Q2 2018 investment values with Q2 2017, C&W noted that Singapore's DC market attracted about USD$550 million of the USD$1.37 billion investment in data centres in the region. At USD$1.37 billion, the Asia Pacific region overtook EMEA to be the second biggest investment market over the past year. The APAC region has recorded explosive growth of 3,348.7 per cent over the past year.
Lynus Pook, Associate Director, Data Centre Advisory, Cushman & Wakefield Singapore said “DC operators in Singapore held back on the construction of data centres, concerned about the large DC stock that flooded Singapore between 2017 and 2018. As result, the market is looking at a very limited stock of newly completed data centres going into 2019. This spells good news
for data centre operators as they can back fill the space that was left vacant since Q4 2017 when competition amongst data centre operators was very intense.
Mr Pook added “The opportunity to fill vacant data centre space in Singapore is narrowing swiftly as the market anticipates the next wave of data centre supply to be ready by the second and third quarters of 2020. With the acceleration of digitisation, we expect data centres to shift from the conventional 20MW to the hyperscale of 50 to 80MW data centres to meet the needs of Cloud operators in Singapore.”
Globally, North America remains the region with the highest transaction volumes in DC investments with a 241 per cent growth in investments in data centres globally.
The DC market has seen consolidation by a few key players who have been able to increase their portfolios, in some cases through the acquisition of platforms.
Looking ahead, with corporate investment forecast to increase, demand for data centres will pick up, resulting in operators seeking out whatever additional stock they can acquire. This includes residual space from existing underutilised enterprise facilities.
Priyaranjan Kumar, Regional Executive Director, Capital Markets, Asia Pacific at Cushman & Wakefield, is confident that the Asia Pacific region will continue to draw investments in data centres. “Explosive Internet of Things, economic growth and increasing country specific data protection laws are now resulting in the build out of data centres across all Asian countries. We expect Singapore and Hong Kong to continue to be favoured regional hosting hubs while most of the incremental installed capacity will come from the more populated and increasingly interconnected economies such as China, India, Vietnam, Philippines, Indonesia and Malaysia”.
As technological innovation and obsolescence both continue at break neck pace, an ongoing risk is outdated stock, such as legacy facilities that may need to be retrofitted at significant cost.
The inability of assets to receive or process the necessary power also remains a concern.
Dominant data centre markets will be those that both are able to serve large end-suer bases within close geographical proximity, as well as those that can provide sufficient electrical power at a competitive price, secure access to sufficient water and fibre connectivity.
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