Digital Realty gears up for China investments

US-based Digital Realty is planting its flag in HK with a new centre in Tseung Kwan O and aims to launch projects on the mainland next year

PUBLISHED : Friday, 19 April, 2013, 12:00am
UPDATED : Friday, 19 April, 2013, 5:26am

Digital Realty Trust, the world's largest builder and wholesale provider of data centres, will start its foray into the mainland next year, with projects planned in Shanghai and Beijing.

Digital Realty chief executive Michael Foust said the company was in discussions with various major information technology services providers on initial projects in those two cities.

"Having domestic partners with strategic relationships in the market and knowledge of local IT services opportunities is important because we're looking at very long-term investments," Foust told the South China Morning Post.

Prior to that expansion initiative, Digital Realty will open in November its first data centre project in Hong Kong at a 15,236 square metre site in Tseung Kwan O.

The San Francisco-based company and its joint-venture partner, information-technology services provider Savvis, are redeveloping an old industrial property into an advanced data centre, which will cater to multinational companies with growing operations in the city.

Kris Kumar, Digital Realty senior vice-president in charge of Asia-Pacific operations, said total investments by the two partners in this project would reach up to US$160 million once it was completed.

A data centre is a secure, temperature-controlled facility equipped to house large-capacity server computers and data-storage systems, which are maintained with multiple power sources and have high-bandwidth links to the internet.

As of the end of February, Digital Realty owned 119 data centres, excluding three held as investments in joint ventures, in 32 markets worldwide.

Foust said the company's total data centre construction expenditure this year would be between US$900 million to US$950 million, up from about US$800 million last year.

He declined to forecast if the company's annual spending would rise significantly once its mainland China projects started to go on stream next year.

"At least for the next couple of years, we see that [range of annual spending] as the typical amount for us to deliver new space and meet demand in our industry," Foust said. "The Asia-Pacific will be a big focus, with [mainland] China as a high priority for us."

Digital Realty's corporate customers include those in the telecommunications, information-technology services, internet and financial services industries.

A report by British firm BroadGroup Consulting in February said the expansion of data centre capacity on the mainland would accelerate over the next few years due largely to domestic demand.

The report estimated that overall investments in new data centre projects across at least 15 mainland provinces would reach US$370 billion by 2016.