Demand for data centre space in Hong Kong is booming due to the rise of cloud computing
Hong Kong, 4 November 2015 - Deepening application of telephony, growing popularity of online media and increasing data utilisation volume per internet user, together with the technology development, including the adoption of cloud computing and big data, have triggered a new round of demand for data centres in Asia. Hong Kong, being one of Asia’s traditional financial centres, is experiencing a sustained demand for data centre facilities, growing at about 10% per annum according to the government.
In the paper “Data Centre in Hong Kong: Existing and Future Clusters”, Colliers looked at the macro-market drivers underpinning the growth of data centres in Hong Kong and the prospective changes against the backdrop of Asia. The paper also looks into the various alternatives in Hong Kong, including new development projects in the pipeline, future government land sales and the opportunities available in Hong Kong Industrial Estates after seeing the emergence of a cluster of data centres in the Tseung Kwan O Industrial Estate.
According to the report, Hong Kong is moving towards cloud computing and will eventually translate into the demand for data centres. At the moment, managing data centre capacity internally is common but it is less flexible. For cost-effectiveness concern, more corporations will likely shift from an in-house data centre to a colocation centre.
Speaking at a press briefing today, Arthur Yim, manager, research & advisory of Colliers International commented that “from the perspective of occupiers, colocation services offer the benefits of more flexible and more reliable infrastructure but a reduced information / technology cost. For occupiers with stringent requirements such as critical systems with thin tolerance of down time, colocation is one of the best solutions.”
On the commercial real estate front, the rising cost of office space in traditional business locations has been evident in many business hubs in Asia due to strong competition for real estate space and the general lack of new supply of commercial space in individual cities. For example in Hong Kong, the bulk of companies engaged in banking and finance are located on Hong Kong Island where office rental costs are high, the potential demand for data centre outsourcing or colocation is strong.
For both end-users and service providers, the key issue is the supply of land catered for data centres. Since 2010, the Government has been facilitating the supply of land through the revitalisation of existing industrial buildings, land opportunities available in Industrial Estates and the pro-active initiative on the land-use conversion to data centres.
"In the next two-and-a-half years, five developments catered for data centres will be completed, providing a total of approximately 1.7 million sq ft of space to the market, representing about 15,000 racks. Majority (66%) of the total new supply will be in Tseung Kwan O Industrial Estate. In medium term, there are two more sites of about 1 hectare each in Tseung Kwan O for data centre development, which could yield a total gross floor area of over 1 million sq ft,” said Wayal Chiu, senior director, industrial services.
Taking a long-term perspective, Hung Shui Kiu in the northwest part of the New Territories is another potential district for data centre development in Hong Kong. There will be a nine-hectare zone for “Enterprise and Technology Park” uses, which will be designated for modern and non-polluting industries, including data centres. The zone could yield a total gross floor area of about 4.8 million sq ft.