Data Center Operators See Hong Kong as Fertile Ground for Growth

With big regional investments in cloud computing and artificial intelligence, the Hong Kong data center market sees major expansion as two cutting-edge facilities open, with two more on the way.

Industrial property group, Goodman, opened the first phase of its new Goodman Tsuen Wan West precinct in Hong Kong. The 1.6 million square foot campus will become one of the largest Hong Kong data center hubs. This development is a part of the company’s goal to expand in Asian markets.

The first two completed buildings are already fully leased out to Goodman’s global customers. The remaining two buildings will be completed in 2024. These state-of-the-art data centers have independent high-voltage power supplies built with resiliency in mind to serve a wide range of data uses. Of that, 87% of the data center space is already committed to global technology customers.

The growing Hong Kong market is geographically attractive for data center developers because it serves both the Chinese mainland and major Asian Pacific economies like Japan, Korea, and Singapore via high-capacity fiber cables. Hong Kong also serves as its own financial hub, with local customers that need data center space for cloud adoption.

The proximity to the Chinese market is especially conducive for growth. Over the past ten years, China has made significant investments in AI. In 2021 alone, Chinese investments accounted for one-fifth of global private investment funding in AI. Large data centers are required for processing AI data for tasks like autonomous driving or speech recognition. In order to expand its AI capabilities, Chinese cloud vendors will likely find Hong Kong as a convenient market.

Hong Kong’s Data Center Market Growth Prospects

That doesn’t mean Hong Kong doesn’t have its share of barriers when it comes to data center market growth. Land scarcity in Hong Kong presents a complication for data center site selection, and local regulations can make construction more difficult than in nearby markets. Goodman, however, got around this difficulty by revitalizing an unused textile factory to meet the region’s growing needs.

The Goodman Tsuen Wan West precinct is Hong Kong’s first data center to offset carbon emissions from construction. The data centers are built to be sustainable. Each building is LEED Gold pre-certified and incorporates solar panels, furthering Goodman’s commitment to sustainability. This marks a departure from mainland China's data centers, which rely on a hefty carbon footprint to operate.

“Goodman Tsuen Wan West is the latest showcase of our commitment to urban regeneration, while meeting the surging demand both locally and regionally for high-tier data centers, technology infrastructure and emissions reduction objectives,” Kristoffer Harvey, CEO of Greater China at Goodman said of the new data centers.

Demand for data centers in Asia are expected to skyrocket over the next five years. Cloud computing, IoT, increased smartphone penetration, and 5G deployment all need data centers to operate. Government support is strong for data center market growth in Hong Kong especially. The government's ambitious goals to digitize and implement smart city initiatives make it an inviting location for data center operators to expand.