CapitaLand Investment Buys Osaka Site for $700M Data Centre Project

CapitaLand Investment has acquired land in Osaka to develop its first data centre in Japan at a total project cost of $700 million, as Singapore’s state-backed property players continue to up their bets on digital infrastructure in Asia’s second-biggest economy.

The development will add 50 megawatts of capacity to CapitaLand Investment’s existing global portfolio of 27 data centres across Asia and Europe with 800MW of power and S$6 billion ($4.4 billion) in assets under management on a completed basis, the Temasek-controlled firm said Tuesday in a release.

A strong balance sheet gives CapitaLand Investment the means to invest in quality data centre assets for future private funds, according to Manohar Khiatani, senior executive director of CapitaLand Investment and head of data centres at parent CapitaLand.

In Japan, Asia Pacific’s largest ex-China server-hosting market, the data centre sector is expected to grow from $23.8 billion in 2023 to $38.7 billion in 2028, Khiatani said, citing Statista research.

“Major cloud service providers such as Amazon Web Services, Google Cloud, Microsoft Azure and Oracle already have a presence in Osaka,” he said. “Our acquisition is hence well-positioned to capture demand in Osaka’s established data centre cluster.”

Off-Market Deal

The AI-ready Osaka data centre will feature sustainability features in line with LEED or an equivalent Japanese certification standard, CapitaLand Investment said. The facility is planned to integrate energy-saving technology like advanced cooling systems and adopt best practices in temperature management to streamline energy and water usage.

The firm’s on-ground team secured the development site in an off-market transaction, said Michelle Lee, managing director for data centre private funds at CapitaLand Investment. The seller’s identity wasn’t disclosed.

CapitaLand has raised $600 million (S$810 million) for its Asia data centre development funds since October 2020 and continues to develop new data centre fund products, Lee said.

“We will also build on our investment momentum and identify compelling investment pipeline opportunities for our private fund investors,” she said.

Team Temasek Swoops

CapitaLand Investment’s Temasek stablemates Keppel Ltd and Mapletree have made their own recent moves in Japan’s data centre market, whose operational capacity of 1.4 gigawatts trailed only China’s 4.2GW in Asia Pacific after the first half of 2024, according to Cushman & Wakefield.

In November, Keppel announced plans to buy a hyperscale data centre project in western Tokyo from the facility’s developer, real estate giant Mitsui Fudosan, on behalf of a private fund. The deal followed through on a framework agreement between Keppel Data Centre Fund II and Japan’s largest builder on the forward purchase of the project, which is the Temasek-backed conglomerate’s first data centre development in the country.

In September, SGX-listed Mapletree Industrial Trust and its Temasek-owned sponsor Mapletree Investments agreed to acquire a western Tokyo facility for redevelopment into a new data centre from Nagayama Tokutei Mokuteki Kaisha for JPY 14.5 billion ($100.5 million).