CapitaLand Investment (CLI) has recently announced its acquisition of a freehold land parcel in Osaka, Japan, marking its first entry into the Japanese data centre market. The development of this new data centre is expected to involve an investment of over US$700 million or $944.3 million, with a secured power capacity of 50 megawatts (MW).
According to CLI, the data centre will not only provide traditional data storage services, but also support artificial intelligence (AI) capabilities. The facility will also incorporate advanced cooling technologies and adopt industry best practices in temperature management in order to reduce energy consumption.
In addition, the company has committed to using environmentally friendly products in the construction and operation of the data centre, such as those with zero ozone depletion potential or with a global warming potential (GWP) of less than 100.
Manohar Khiatani, senior executive director of CLI, who oversees the group’s data centre business, believes that this acquisition is in line with the company’s focus on digitalization and will help to deepen its presence in Japan, which is one of its strategic markets. He adds that the strong financial position of CLI allows it to strategically invest in quality assets, including data centres, for its future private funds.
Japan is a Tier 1 data centre market with a projected compound annual growth rate (CAGR) of 10% from US$23.8 billion in 2023 to US$38.7 billion in 2038. It is also the largest data centre market in Asia Pacific, excluding China, with a capacity of 1.4 gigawatts. Khiatani points out that major cloud service providers such as Amazon Web Services, Google Cloud, Microsoft Azure, and Oracle already have a presence in Osaka, making this new data centre well-positioned to capture the demand in the established data centre cluster.
Michelle Lee, managing director of private funds (data centre) at CLI, expects the demand for data centres to continue growing at a double-digit rate, outpacing the supply of new facilities. She also notes that there is a strong institutional interest in data centre investments, with 97% of investors planning to increase their investment in this sector.
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Since October 2020, CLI has raised US$600 million for its data centre development funds in Asia and plans to continue identifying attractive investment opportunities for its private fund investors. With this latest acquisition, CLI now has a global portfolio of 27 data centres in Asia and Europe with around 800 MW of power and assets under management of approximately $6 billion.
On Feb 3, shares in CLI closed 1.63% lower at $2.42.