Hong Kong property

Land tender for data centre site in Tseung Kwan O expected to draw ‘strong’ interest, analysts say

  • The 295,405 square foot site in Tseung Kwan O will close for tender on Friday
  • The site is the first to be offered as a data centre since Sunevision, the information technology unit of Sun Hung Kai Properties, bought a site in the same area in 2013
PUBLISHED : Wednesday, 05 December, 2018, 8:00am
UPDATED : Wednesday, 05 December, 2018, 8:28am

Hong Kong’s biggest land site earmarked for development as a data centre is expected to draw intense bidding as the growth of cloud computing drives demand for such purpose-built facilities.

The 295,405 square foot site at Wan Po Road, Area 85, Tseung Kwan O will close for tender on Friday. Under a plot ratio of 4.5 times, the site will house a structure with a gross floor area of up to 1.33 million sq ft, or roughly the size of more than 19 football pitches.

“We expect this would generate a great amount of interest,” said Raymond Fung, regional director of capital markets at JLL in Hong Kong. “In the short-run, we still expect some upwards pricing pressure on data centres in Hong Kong.”

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Pruden Group values the site at HK$1.99 billion (US$255 million), or HK$1,500 per sq ft.

The land parcel is the first specified for use as a data centre since Sunevision, the information technology unit of Sun Hung Kai Properties, won a lot at tender for HK$428 million, or HK$904 per sq ft, in the same area in 2013.

Last year, Sunevision opened the 473,600 sq ft Mega Plus on the site.

“As the cloud market matures, organisations need to establish their infrastructure capacity quickly to keep up,” said Bob Tan, director of alternatives at JLL Asia-Pacific. “We’re seeing more investors looking to enter or increase their exposure to the data centre sector as it offers diversification benefits and tends to have higher yields than traditional asset classes, such as office or retail.”

John Siu, managing director of Cushman & Wakefield, said the site was one of the last remaining parcels specified for data centre use.

“The parcel is very rare. So far I have not seen the government disclosing relevant information [about more land for data centres],” Siu said. “The total gross floor area is more than twice of the last parcel. The completed data centre this time could be the biggest in Hong Kong and serve as a benchmark in the market.”

He noted the site had to meet unique standards, such as proximity to electrical power, which added to its scarcity value.

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“Some data centres users, such as banks, need both primary and secondary sites that can complement each other,” he said.

Siu said Tseung Kwan O has become a data centre hot spot, attracting companies such as PCCW, IBM, HSBC and Hong Kong Exchanges and Clearing.