Asia Pacific Data Centre Update

APAC PRIMARY MARKET - RANK #2

KEY INDICATORS*

16 OPERATORS, 39 DATA CENTRES

417MW IN OPERATION

453MW UC / PLANNED

15% VACANCY RATE

* Definition: Key indicators are based on operational Hyperscale Cloud, Colo, Edge & Telco data centre facilities in the market and excludes Captive & ICT.

Colo Hyperscale Cloud Telco

MARKET OVERVIEW

Hong Kong is a robust data centre market which offers excellent regional and global connectivity, and availability of all major cloud networks. As a global financial and business capital, gateway to mainland China and for its globally lowest taxed data centre jurisdiction, there has been strong demand from data centre investors and operators that triggered a high volume of transactions in 2021, which have continued this year. However, the supply pipeline will be constrained in the medium to long term due to shortage of land and power supply, especially in Kwai Chung, Tsuen Wan, Shatin, Tsing Yi and Fanling, where it could take over 5 years to secure power and average land prices for data centre developments have appreciated 20-30% over the last few years. Locations such as Tuen Mun and Lantau Island provide better opportunities in relation to land and power, however, investors and operators are reluctant to pioneer new data centre territories in Hong Kong just yet. The Hong Kong government is also supporting the growth of the data centre market through many digitalisation initiatives, such as the Data Centre Facilitation Unit , which provides assistance regarding data centre developments in Hong Kong, including liaising with other government departments on matters such as statutory approval processes, compliance requirements or procedures. China has listed data centres as a key decarbonisation target alongside traditional heavy-emitting industries, and has ordered the country’s data centre operators and telecoms providers to conserve water and electricity, to locate facilities in areas with plentiful renewable energy and to develop lower-power facilities and equipment. The government has adjusted its policies to push the data centre industry to decarbonise in pursuit of the national goal of carbon neutrality by 2060.

ECOSYSTEM DEVELOPMENTS • AirTrunk has signed a new renewable energy agreement with Hong Kong utility CLP Power to off-set Microsoft ’s energy use in its HKG1 data centre. The solution will be directly linked to CLP’s West New Territories (WENT) Landfill Gas Power Generation Units. • ESR Cayman , Hong Kong based logistics real estate firm, has closed its first data centre development fund with over US$1bn in equity commitments for its inaugural vehicle, Data Centre Fund 1 (ESR DC Fund 1), dedicated to the development of its data centre business across Asia Pacific. The firm had previously announced its intention to expand its Hong Kong footprint during the first half of the year. • GDS secured a major hyperscale tenant for its Hong Kong 1 data centre during Q2 2022. • Goodman , an Australian integrated commercial and industrial property group, opened a data centre complex in Hong Kong’s New Territories with up to 400MW in overall power capacity, creating one of the city’s largest digital infrastructure facilities. The first two facilities have been completed and fully leased to Equinix and Vantage Data Centres . • PAG , the Hong Kong based global investment firm has been reportedly selected as one of three final bidders for Global Switch , who operate 13 data centres across Europe and Asia Pacific and is owned by Chinese steel giant Jiangsu Shagang Group . They have been seeking a US$10-11bn sale since early 2021 after having failed to launch Global Switch on the Hong Kong stock market. • Tencent and state-owned telecommunications company China Unicom ’s have received regulatory approval by the State Administration for Market Regulation to set up a joint-venture to team up on data centres and edge computing. • Vantage Data Centers , a leading global provider of hyperscale data centre campuses, announced the official opening of a new office in Hong Kong. The office serves as the regional hub to house engineering, construction, sales and leadership functions to support Vantage’s expanding business across the APAC region.