Keppel Teams With Mitsui Fudosan on Data Centre Opportunities, Eyes First Japan Project

Singapore’s Keppel Ltd has signed a tentative deal with Japanese real estate giant Mitsui Fudosan to explore data centre development and investment opportunities in Japan and Southeast Asia.

In addition, the private Keppel Data Centre Fund II has a framework agreement with Mitsui on the proposed forward purchase of an under-development facility in western Tokyo that will mark Keppel’s first data centre project in Japan, the Temasek Holdings-backed firm said Monday in a release. No financial terms of the deals were disclosed.

Under the memorandum of understanding, Keppel expects to work closely with Mitsui, Japan’s largest developer, to further penetrate the market and deliver attractive risk-adjusted returns to investors, said Christina Tan, the firm’s chief investment officer and CEO of fund management.

“As one of the leading digital hubs in Asia, Japan’s data centre market continues to grow at an exponential pace,” Tan said. “The western Tokyo data centre presents a rare opportunity for Keppel to enter the Japan data centre market.”

Fund’s Tokyo Debut

The $1.1 billion KDCF II fund, which is backed by investors including China’s Asian Infrastructure Investment Bank, will work exclusively with Mitsui on the acquisition of the purpose-built data centre in western Tokyo with a planned gross floor area of more than 300,000 square feet (27,871 square metres).

Mitsui plans to develop the core and shell of the property while KDCF II undertakes the fit-out with help from Keppel’s data centre and networks division, which will manage the facility upon completion. The data centre is expected to be ready for service in 2027.

“We are pleased to sign the MOU with Keppel and we look forward to further deepening our relationship with Keppel and leveraging each other’s expertise to create value together,” said Takayuki Miki, Mitsui’s senior executive managing officer and chief operating officer of the logistics properties division.

Mitsui Fudosan’s sister firm Mitsui & Co, a trading arm of the Japanese group, announced in 2021 that it planned to invest JPY 300 billion ($2.7 billion) in the construction of Japanese data centres by 2026.

International Love

Mitsui Fudosan continues to connect with foreign partners after earlier this month announcing the acquisition of two California shed projects under an existing industrial tie-up with US developer Tishman Speyer.

The Japanese builder will work with New York-based Tishman to upgrade a San Francisco facility and start construction of a 55,300 square metre (596,000 square foot) warehouse in Orange County next year. The partners jointly acquired both projects in the past eight months.

Mitsui is also expanding its Australia residential joint venture with Singapore’s Frasers Property to A$797 million ($509 million) in investment value under a deal announced last September.

Mitsui Fudosan achieved a record-high attributable profit of JPY 166.4 billion ($1.1 billion), up 13.1 percent year-on-year, in the fiscal nine months to December as operating revenue, operating income and ordinary income also reached all-time peaks.