Internet service providers are on the prowl for space in which to house data centres, as demand among their customers for data storage rises.
'We are working on plans to acquire additional space for growth and expansion,' said Alfred Tsim Wing-kit, chief executive officer of SUNeVision, the technology arm of one of Hong Kong's largest landowners, Sun Hung Kai Properties.
SUNeVision's subsidiary, iAdvantage, operates four data centres in Hong Kong - one on Hong Kong Island, two in Kowloon and one in the New Territories - that together occupy more than 500,000 square feet. Overall occupancy is approximately 87 per cent, the firm said.
Last week, Google said it would invest more than US$100 million in Hong Kong to establish a new data centre - one of three it plans to set up in Asia under an aggressive infrastructure expansion programme.
More such moves may be expected from other providers, and the expansion plans could give a shot in the arm to the industrial property market, agents say.
'New data centres can be built on greenfield sites or through conversion of existing industrial buildings,' Tsim said. 'Land is a precious resource in Hong Kong and data centre operators have to compete with other industries for land in the open market.
'Industrial buildings have therefore become a very attractive and practical option as they are readily available in the market and offer diversity in terms of location, size and specifications to suit different requirements. They also offer a time-to-market advantage,' he added.
Tsim said there had been a number of successful cases where operators entered into long-term leases on industrial buildings for their operations, and this had been the most popular mode of expansion over the past year or so.
Data centre operators had been appealing to the government to facilitate the conversion of industrial buildings into data centres because it could easily take a year or more to secure the necessary approvals from government departments, Tsim said.
A data storage centre is a secure, temperature-controlled facility that is built and equipped to house large-capacity server computers and enterprise data-storage systems, which are maintained with multiple power sources and have high-bandwidth links to the internet.
To house its data centre, Google has acquired 2.7 hectares of land on the Tseung Kwan O Industrial Estate, and expects to start using the facility within one or two years. It also plans to build data centres in Taiwan and Singapore.
Another international internet service provider, NTT Com Asia, a unit of the Japanese telecommunications giant, also plans to build a HK$3 billion data centre on the Tseung Kwan O Industrial Estate. The complex is set to open in 2013.
Raymond Chu Leung-hang, a director at Ricacorp Properties, said he believed Google, the world's largest search engine operator, could lure more international players to build data centres Hong Kong, which would serve as a springboard to the mainland.
'We have at least five clients looking to buy industrial spaces for the use of data centres. We only began getting such inquiries early this year,' he said.
Chu said internet service providers were eyeing spaces from 30,000 square foot to entire industrial buildings that could be converted into data centres. Buildings with industrial power supplies, high ceilings, a high floor-load capacity and a flexible floor layout would be their first targets.
'They prefer locations in Chai Wan, Kwai Chung or Kwun Tong, where the centres would be within an hour's travel to and from their companies,' Chu said.
John Siu, general manager for Hong Kong and southern China at property brokerage Cushman & Wakefield, said owners could raise their rent by between 150 and 200 per cent if they converted their industrial buildings into data centres.
'Space could be leased for between HK$15 and HK$20 per square foot as a data centre compared with HK$10 per square foot for use as a warehouse,' he said. Demand for such spaces had outstripped supply and he expected demand to continue growing over the next 10 to 20 years.
At present, the industrial estates in Tseung Kwan O and Yuen Long, managed by Hong Kong Science and Technology Parks Corporation(HKSTPC), are major land sources for the development of data centres.
However, a spokeswoman for HKSTPC said most of the 75 hectares of land at the two estates had already been sold.
Only a 5,000-square-metre site on the Yuen Long Industrial Estate was still available for application, she said. Interested parties should submit an application with supporting information to assist the corporation in the assessment of projects.
The percentage of carbon emissions contributed by data centres to the entire IT sector's carbon footprint