High data centre rents have allowed three firms to dominate US$883 million Hong Kong market

Land scarcity and some of the highest rents in Asia-Pacific have allowed three operators of data centres to dominate the market – estimated at US$883 million – in Hong Kong.

According to a report released on Wednesday by Toronto-based consultancy Structure Research, which focuses on data centre and internet infrastructure, NTT Communications, a subsidiary of Japan’s largest telecommunications company, Nippon Telegraph and Telephone Corporation, Sunevision Holdings, the technology arm of Hong Kong property developer Sun Hung Kai Properties and US-based global co-location data centre operator Equinix command 55 per cent of revenue in the sector.

Without sufficient land supply, can Hong Kong maintain its status as a data centre hub?

NTT Communications accounted for 23 per cent, Sunevision for 18 per cent and Equinix for 16 per cent, according to the report. It forecast that the sector will grow by 17 per cent to US$1.03 billion this year, and increase to US$1.7 billion in 2023.

John Siu, managing director at Cushman & Wakefield, said data centre rents in Hong Kong were among the highest globally. “Data centres have been an attractive option for developers and investment funds, as strong demand can support rental growth,” he said.

Charles Mok, the legislative councillor representing the information technology functional constituency in Hong Kong, said limited land for such centres was an obstacle to competition. “It is indeed harder for new entrants, or even for existing ones to expand,” he said.

According to the report, 44 operators run 57 data centres in Hong Kong. Sunevision was the largest operator last year, with a portfolio of 482,000 square feet, about 66.2 per cent bigger than Equinix in second place.