Hong Kong has the lowest risk as Data Centre location among Asia Pacific region
HONG KONG, Oct. 24, 2011 /PRNewswire-Asia/ -- Cushman & Wakefield, the world's largest privately-held commercial real estate services firm, has joint hand with Hurleypalmerflatt, top-notch engineering consulting company to release a survey report on the risk of setting up data centres in 20 countries / regions in the globe. Among the listing, the 2 North American countries -- USA and Canada ranks the first and second place respectively, while Hong Kong, ranks the fourth, is the highest ranking region within Asia Pacific area. Singapore comes eleventh in the list and ranks the third among Asia Pacific regions. The report reflects that Hong Kong has far less risk in setting up data centre when compared with other Asian Pacific countries.
Cushman & Wakefield and Hurleypalmerflatt carried out a comprehensive risk evaluation on 20 countries / regions based on 11 factors that the operation of data centres rely on: energy cost, internet band-width, ease of operation, corporate tax rate, labour cost, political stability, sustainability, natural hazards, GDP, inflation and water resources.
Hong Kong has leading edge for setting up data centre
According to Mr. John Siu, Executive Director, Hong Kong, Cushman & Wakefield, the report shows that Hong Kong has a leading edge as the ideal location for setting up data centre in Asia Pacific region. He pointed out that since global corporations entering into the computer era in early 1980s, the demand and scale of data centres has been incrementing. With the rapid expansion of internet in mid 90s and the technology websites craze in 2000, corporations are demanding better facilities and stability in data centres. This directly stimulates the development of the industry in Hong Kong. Banks and financial institutions turned industrial buildings and warehouses into data centres. A few developers grasped the opportunity to build data centre building on warehouse or industrial building land sites. Developers and telecommunications providers even turn their car parks or telephone exchange buildings into data centres. Most of these converted sites are in Taikoo Place, Quarry Bay, Siu Sai Wan, Shatin, Kwai Chung and Tsuen Wan. Other industrial areas, such as Chai Wan, Aberdeen, Wong Chuk Hang, Sai Wan, Kwun Tong, Kowloon Tong and Hung Home, see far less conversion of that sort as most of the ceiling heights of buildings in these areas do not comply with the requirement of data centres. Areas like Tuen Mun, Yuen Long, Fanling, Sheung Shui and Taipo are usually not in institutions' considerations because of the location.
There is barely any new industrial building and warehouse built since 1997, Mr. Siu added, and the fact that conveniently located industrial buildings are revitalized or converted to other uses, there is a decrease in buildings suitable as data centres. Once the customer has settled in the data centre they rarely move out within 5 or even 10 years because of the high relocating costs. The data centre market has seen an increasing trend in demand over the past 2-3 years. With the current insufficient supply, the renewal of Somerset House, Cornwall House and Warwick House in Quarry Bay will put further pressure on the data centres location. The costs for converting industrial buildings and warehouses are high, and conversions like back-up power generator, diesel tank, adaptor, switch room and air-conditioning facilities require large public places, e.g. rooftop, podium and car park. Most property owners are reluctant as they find the existing building hard to meet the requirements. Those who are willing usually demand a higher rent, at times 1.5 or even 2 times more than market price, which leads to a continuous rise in data centres rent in the past few years.
Government should provide land to meet data center needs
In view of this, Hong Kong Science & Technology Parks Corporation has permitted private institutions to purchase land or factories in the industrial area in Tsueng Kwan O, Tao Po and Yuen Long and convert them to data centres. Tsueng Kwan O, with its proximity to the city centre and more available lands and factories, has the largest number of successful cases. Large data centres for corporations like HSBC, Hong Kong Stock Exchange, NTT and HKCOLO are built or under construction to meet the market demand. However, there is only one site left in Tseung Kwan O that is available. If the said site is sold and used as data centre construction, the supply tension will be eased. In the long run, it is necessary for the Government to include space for data centres when developing urban planning. Another option is an Industrial Park, taking example from Singapore's experience, which could help secure Hong Kong's position as the leader in data centre location in Asia Pacific.
About Cushman & Wakefield
Cushman & Wakefield is the world's largest privately-held commercial real estate services firm. Founded in 1917, it has 234 offices in 61 countries and more than 13,000 employees. The firm represents a diverse customer base ranging from small businesses to Fortune 500 companies. It offers a complete range of services within five primary disciplines: Transaction Services, including tenant and landlord representation in office, industrial and retail real estate; Capital Markets, including property sales, investment management, investment banking, debt and equity financing; Client Solutions, including integrated real estate strategies for large corporations and property owners, Consulting Services, including business and real estate consulting; and Valuation & Advisory, including appraisals, highest and best use analysis, dispute resolution and litigation support, along with specialized expertise in various industry sectors. A recognized leader in global real estate research, the firm publishes a broad array of proprietary reports available on its online Knowledge Center at www.cushmanwakefield.com.
