Australia's AirTrunk launches Hong Kong data centre as it looks to tap demand for cloud computing services

By Pearl Liu pearl.liu@scmp.com

/ https://www.scmp.com/business/article/3113008/australias-airtrunk-launches-hong-kong-data-centre-alibaba-amazon-and?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp&utm_content=3113008 |

December 10, 2020 2:00 PM SGT

Join our Telegram channel and follow our Facebook for the latest update.

Australian data centre operator AirTrunk opened its first facility in Hong Kong on Wednesday, with the launch coinciding with a shift by many companies to cloud computing to enhance online user experience or facilitate seamless remote working amid the Covid-19 pandemic.

The carrier-neutral data centre operator has signed a 10-year lease for an eight-storey industrial building in Tsing Yi with 17,400 square metres (187,292 square feet) of gross floor space. AirTrunk did not disclose the rent for the building, but property agents said it could be around HK$4.2 million (US$542,000) a month based on market rates.

"We have had a record year in terms of the number of leases signed," said Robin Khuda, founder and CEO of Sydney-based AirTrunk.

Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.

Before the pandemic, a lot of companies were on the fence on whether to move to cloud computing as "Covid-19 left them no choice but to move from in-house to cloud as many companies are now in remote working mode," he added.

The Asia-Pacific data centre market is predicted to grow 12 per cent over the next four years to reach a value of US$28 billion. Photo: Shutterstock Images alt=The Asia-Pacific data centre market is predicted to grow 12 per cent over the next four years to reach a value of US$28 billion. Photo: Shutterstock Images

Hong Kong, which is battling its fourth coronavirus wave, has once again seen many companies asking their employees to work from home, while the government sent its nearly 180,000 civil servants on similar regime. In the past month, some of the city's biggest employers, such as Standard Chartered and HSBC, said they were considering ways to digitise more of its operations and having more flexible working arrangements, such as time split between offices, at home or co-working facilities.

The demand for data centres and its growth potential has caught the attention of both investors as well as landlords who were now willing to convert their properties for such operations.

In July, China Mobile, the world's largest wireless network operator, paid a record HK$5.6 billion for an industrial plot in Sha Tin, in a fierce bidding competition that involved a few Hong Kong tycoons as well as Singapore's state-controlled Mapletree Investments.

GDS Holdings: Alibaba, Tencent cloud data centre host views Hong Kong as hub for Southeast Asia

"When I first looked for sites in Hong Kong in 2015, landlords told me that they do not want to lease their property to a data centre because they were not sure what [kind of business] we were and whether we would be able to pay rent," Khuda said.

The Asia-Pacific data centre market size is predicted to grow 12 per cent over the next four years to reach a value of US$28 billion, according to Cushman & Wakefield. In the first eight months of 2020, nearly US$1.5 billion was invested in data centres in Asia, with Hong Kong accounting for more than half the amount, data from the consultancy showed.

"Amid the backdrop of the pandemic and rapid adoption of 5G in China, there is a strong demand for data processing services due to the increasing use of data because of the social distancing measures," said Humbert Pang, managing principal of Hong Kong-based Gaw Capital Partners, which in September raised US$1.3 billion for its first data centre fund.

In July, China Mobile paid a record HK$5.6 billion for an industrial plot in Sha Tin where it plans to build a data centre. Photo: AFP alt=In July, China Mobile paid a record HK$5.6 billion for an industrial plot in Sha Tin where it plans to build a data centre. Photo: AFP

AirTrunk's Hong Kong operation, which has a capacity of 20MW, will serve consumers in the city as well as offer direct and low latency access to China and neighbouring Northeast Asian countries.

JLL estimates that Hong Kong currently has a data centre capacity of 285MW, the third largest in the region after Tokyo's 315MW and Singapore's 330MW.

Global technology behemoths Google and Facebook had considered setting up data centres in Hong Kong, but eventually abandoned their plans in 2013 and 2018, respectively, citing the paucity of land for future expansion.

On Hong Kong's ambitions to become a data centre hub, Khuda said the city will have to solve the problem of insufficient land plots and buildings to house these operations.

"The biggest challenge here still is expensive land," said Khuda.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

Follow our channels to receive property news updates 24/7 round the clock.

Subscribe to our newsletter