GIC, Equinix and Lendlease Announce $2B in Data Centre Ventures in Two Days

Cloud providers like Google, Microsoft and Alibaba, which house armies of servers in huge bit barns, demonstrated their appeal to real estate investors in Asia Pacific again this week, with two $1 billion data centre partnerships announced in two days.

Australian-listed property developer Lendlease announced on Sunday that it had entered a $1 billion partnership with an unnamed institutional investor to build data centres in Asia Pacific.

That Aussie initiative was followed a day later by an announcement from California data centre provider Equinix that it had formed a $1 billion joint venture with Singapore sovereign wealth fund GIC to build and operate hyperscale data centres in Europe.

Hyperscale Data Centres for the World’s Largest Cloud Providers

Under the terms of the agreement, GIC is purchasing an 80 percent equity interest in the joint venture, while Equinix will sell two data centres in London and Paris to the new entity, as well as other development interests, in exchange for the remaining 20 percent in equity.

“As a long-term value investor, we are confident that the strong growth in data consumption and public cloud data storage will continue to drive secular demand for hyperscale data centers,” said Lee Kok Sun, chief investment officer of GIC Real Estate. “We believe the venture portfolio, which is well-located in the primary European data center hubs and under the management of an established partner such as Equinix, will generate steady and resilient returns in the long run.

The Redwood-based company, which has a portfolio of 200 data centres worldwide and has already partnered with Alibaba Cloud, Microsoft Azure and Google Cloud, will use the investment to fund development of four of the company’s xScale line of hyperscale data centres in Amsterdam, Frankfurt and London.

Measuring tens of thousands of square metres, and packed with thousands of servers, routers and other networking gear, Equinix targets its largest data centres to the requirements of the world’s data cloud giants.

Lendlease to Expand its APAC Footprint

While GIC and its new partner target the European market, Lendlease, which had 61 percent of its A$7.6 billion ($5.3 billion) in assets in Australia and Asia at the end of last year, is aiming to expand that portfolio into the data centre segment.

“A data centre platform is a strategic fit for the Group, aligning with our targeted key trend of infrastructure, our telecommunications strategy and our integrated business model,” Lendlease’s chief executive officer for Asia, Tony Lombardo said.

The Lendlease Asia chief added that the developer was targeting the server farms because of the strong growth potential of the sector, which is evolving into a mainstream real estate asset class.

The $1 billion deal will be the Sydney-headquartered developer’s first foray into the data centre segment in Asia Pacific, targetting projects in Australia, China, Japan, Malaysia and Singapore.

The company said in its announcement that the partnership will be funded 20 percent by Lendlease and 80 percent by its institutional partner, with an initial equity commitment by the parties of $500 million.

Investor Appetite for Data Centres Shows No Signs of Slowing

The pair of initiatives come as investors continue to show an appetite for data centres in the region.  A report released in October last year by market research firm Arizton projects growth of more than 12 percent annually in APAC through 2023.

Just two weeks ago, GIC entered into a partnership with data centre provider Polymer Connected to build a hyperscale data centre campus in Jakarta, while just a week earlier New York Stock Exchange-listed Digital Realty entered a 50/50 joint venture with Mitsubishi Corporation to build a data centre in Tokyo that will be capable of delivering over 35 megawatts of capacity by 2021.

These deals followed the announcement in September last year that Facebook had chosen Singapore as the site of its first billion-dollar data centre in Asia, with an 11-storey, 170,000 square metre (1.8 million square feet) structure in the industrial district of Jurong East, slated to be operational in 2022. That project by the social media giant will neighbour Google’s existing two data centres in Jurong West.