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Hong Kong property

Hong Kong’s race with Singapore to be Asia’s data centre hub gets another leg up as final site sells at 45 per cent premium to valuation

  • Deal sharpens the city’s competitiveness in a race with Singapore to be a regional smart city
  • The final site sold for HK$5.45 billion, more than expected
PUBLISHED : Wednesday, 12 December, 2018, 6:00pm
UPDATED : Thursday, 13 December, 2018, 12:02am

Hong Kong’s biggest and last remaining piece of land designated for development into a data centre sold for a higher-than-expected HK$5.45 billion ((US$697 million) to Sunevision Holdings, sharpening the city’s competitiveness in a race with Singapore to be the regional hub for such purpose-built facilities.

The winning bid was 45 per cent higher than Colliers International’s estimate of HK$3.75 billion for the plot.

“Hong Kong has been lagging behind Singapore as we do not have sufficient land earmarked for data centres. With this large scale development, global and regional data centre operators will definitely set up their facilities in Hong Kong,” said John Siu, the managing director of Cushman & Wakefield.

It would indirectly increase Hong Kong’s global connectivity, and further reinforce the city as an internet hub in the region, he said.

Data centres to become rising investment class amid Hong Kong’s smart city bid

“Multinational corporations will also consider setting up their headquarters in Hong Kong over rivals once we provide an abundant supply of data centres for the storage of their servers,” he said.

The 295,405 square foot site at Wan Po Road Area 85 in Tseung Kwan O attracted nine bidders when the tender was closed on Friday. With a plot ratio of 4.5 times, the site will house a structure with an area of 1.21 million square feet.

Siu said the winning developer of the site would probably lease some of the spaces to individual data centre operators after the completion of the project.

It was the second data centre plot Sunevision – the information technology unit of Sun Hung Kai Properties – has acquired in the last five years.

The price tag for the latest plot is equivalent to HK$4,500 per square foot, up fivefold from the HK$904 per sq ft that Sunevision paid in 2013. Five years ago, Sunevision won the site at tender for HK$428 million.

Investors increasingly put their store in data centres amid rapid growth in cloud services

Data centres are likely to play a leading role in the smart cities of the future, handling the enormous amounts of data involved. The rapid growth in cloud services and e-commerce has fuelled a boom in data centres in mainland China and Hong Kong.

Land in Hong Kong can be costly compared to countries like Singapore, and there have been calls for the government to allocate cheaper land in remote parts of the New Territories for data centres and to offer other financial incentives.

Facebook had built a 4 million square foot data centre in Singapore because the government gave the land almost for free, Hannah Jeong, head of valuation and advisory at Colliers, said last week.

According to Colliers, Hong Kong currently has about 8.2 million square feet of data centre space available, and the Tseung Kwan O site will add a further 1.21 million square feet, a relatively small increase given the growing demand for such facilities around the region.

Hong Kong Science and Technology Parks Corporation has stopped granting land in the three industrial estates for data centre development, said Siu.

“Supply will be tight. We have received increasing inquiries from global and local data centre operators looking for 200,000 and 300,000 square foot spaces,” he said.

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