Data centres are no doubt becoming a key asset in many investors’ portfolios due to the ever-increasing number of internet users, as well as greater connectivity across Asia Pacific. Japan and Singapore recently witnessed data centre deals worth over $350m in total. The investment arm of French insurer AXA acquired its first Japan data centre in early December, a sign of strong investor appetite for the real estate sector amid a boom in internet usage. AXA bought the server facility, one of Tokyo’s largest data centres, for approximately US$210 million. AXA deal signals a wider move from investors toward sectors that have fared better during the downturn, such as logistics and life sciences real estate. Internet usage for cloud-computing needs is surging, with tech firms such as Google, Amazon and Microsoft reporting substantial increases for their services. According to business insights provider Research and Markets, cloud-computing revenue will increase 87 percent from 2021 to 2025, while data centre revenue will grow 22 percent in Asia Pacific.
In Asia Pacific, Singapore, Hong Kong, Sydney, and Tokyo are typically the four main data centre hubs, as these regions have been selected based on their economic size and population. Japan’s reputation as a traditional safe haven has also resonated with investors looking to diversify their portfolios away from offices. Singapore is a hot spot for similar reasons. The likes of Facebook and Zoom have opted to set up their data centres in the city-state, with the former building its first in Asia there, which will be ready by 2022, while Zoom opened theirs in April 2020. Singapore’s moves to halt the construction of data centres on the land-scarce island could pave the way for other countries in Southeast Asia to step up their efforts and better appeal to investors. Singapore currently accounts for nearly 60 percent of Southeast Asia’s data centre supply, according to data centre provider Digital Realty. Neighbouring Indonesia is poised to gather force, with reports projecting that its data centre market could see US$1.5 billion in cumulative investments through 2025. The country also got a boost when Google confirmed in March that it is planning to open one in Indonesia’s capital next year.