Hyperscalers Shaping Data Centre Demand in North Asia: MTD TV

With seemingly limitless demand bumping up against supply constraints and entry barriers in North Asia, hyperscale data centres continue to have plenty of runway for growth in some of the region’s biggest and most mature markets, according to a panel of experts on MTD TV.

Greater China, Japan and Korea now account for about 75 percent of data centre capacity in Asia Pacific, which in turn represents close to 45 percent of global capacity, says the consultancy Structure Research. But far from tapering off, investment seems primed for takeoff as hyperscale operators strive to meet the needs of large companies’ ever-growing data centre footprint.

To shed some light on North Asia’s opportunities and challenges, Mingtiandi founder Michael Cole joined Bill Gao, executive vice president and CEO for Greater China at BDx Data Centres; Thomas Liu, a partner at UK-based fund manager Actis; and Jabez Tan, head of research at Structure Research, for the final session of Mingtiandi’s Asia Data Centre Forum 2021.

During Thursday’s one-hour event, which was sponsored by Yardi, the panelists touched on topics such as land and power procurement and how global hyperscalers are driving demand for extensive and connected data centre networks across the region.

More Room to Run

In Tan’s view, it remains “early innings” for North Asia’s internet infrastructure evolution.

“I would say we’re still very early stages of growth, especially for markets like Japan, South Korea, Taiwan and even Hong Kong,” he said, noting that the special region has yet to see a second wave of large hyperscale deployments coming out of mainland China.

Japan, whose data centre market is worth an estimated $7 billion, is only just getting started as Western and Chinese hyperscalers compete for market share in the world’s third-biggest economy, Tan said.

The presence of established hyperscale clouds in China under local giants like Huawei, Tencent and Alibaba — and the absence of comparable champions in Japan — makes for a “perfect battleground” in Japan for global hyperscalers like Amazon, Microsoft, Google and their Chinese counterparts, the analyst said.

Barriers to Entry

With Actis having invested in a pair of data centre projects in the Seoul area, Liu described some of the hurdles encountered when seeking sites in South Korea.

“It’s very hard to find land — especially land with the power — so that, from our experience, is the greatest barrier of entry to source projects that will have readily available demand from all the hyperscalers,” he said. “And if you look at projects that have been built in the last three to five years in Seoul, everything is leased up before completion.”

Liu noted that the South Korean government is taking steps to ease the capacity crunch, including a plan to set up a new 100-megawatt cluster near the old Gimpo Airport serving Seoul.

In China, where Actis has a joint venture with Chayora to develop data centres, similar snags arise when sourcing sites.

“In Tier 1 cities, the government has been very strict in awarding new power quotas for new data centre projects,” Liu said. On the other hand, with data centres having been named one of the five infrastructure priorities for the country, more capital is flowing into the sector, both internationally and domestically.

“We’ve seen a lot of domestic capital starting to chase data centre opportunities,” Liu said.

China’s Regional Reach

BDx’s Gao is expecting China’s hyperscale cloud service providers to drive demand for regional data centre networks like the one his company is building from its base in Singapore.

“They are one of the most important customers for us,” he said, adding that BDx facilities are already supporting some of the biggest Chinese players in streaming video.

Gao sees investment in undersea cables as the most important development to watch over the next 12 months, as these systems form the critical connectivity infrastructure to meet the growing bandwidth requirements of hyperscalers.

You can watch the full discussion above.

Office Forum Up Next

With the data centre forum now in the books, the month of October brings Mingtiandi’s Office Strategies Forum 2021, including sessions on the prospects of office investment and innovation in APAC markets.

The forum kicks off on 12 October with a one-hour interview spotlighting the experiences and insights of a market leader. Mingtiandi founder Michael Cole will interview a top executive of the company live, while attendees will have the opportunity to join a question-and-answer session after the talk.

On 19 October, a panel of experts will discuss office investment in core APAC markets like Hong Kong, Singapore, Tokyo, Shanghai and Beijing. Joining the show will be Rushabh Desai, APAC CEO at Allianz Real Estate; Terence Tang, managing director for capital markets and investment services in Asia at Colliers; and two other speakers to be announced.