Investors increasingly put their store in data centres amid rapid growth in cloud services
As yields and returns in traditional real estate get squeezed, investors are looking at alternative asset classes
The startling growth in cloud services and China’s booming e-commerce sector has fuelled a boom in data centres on the mainland and Hong Kong, making them increasingly popular with Asian investors as an “alternative real estate asset class”, according to a report by global law firm White & Case.
Data centres are part of a growing group of alternative real estate asset classes such as logistics, student housing and co-living spaces that are steadily gaining popularity compared to traditional commercial, residential and mixed-use units.
“It is widely reported that 90 per cent of the world’s data was created in the last two years, which gives you an idea of the growth in the area,” said James Dodsworth, head of global real estate at White & Case and author of the report. “As yields and returns in traditional real estate are becoming increasingly hard to come by, investors are looking at alternative asset classes to drive returns.”
This asset class has found favour with real estate private equity and sovereign wealth funds from around the world in the past few years. Between 2014 and 2017, there were 24 merger and acquisition deals involving data centres in Asia worth over US$4 billion, according to the report.