CapitaLand Investment (CLI) has recently acquired a freehold land parcel in Osaka to develop its first data centre in Japan. The estimated investment for this project is over US$700 million, or $944.3 million, with a secured power capacity of 50 megawatts (MW).
CLI has expressed that the data centre will be equipped to support artificial intelligence (AI) capabilities, and will also prioritize energy-saving solutions such as advanced cooling technologies. In addition, the data centre will adhere to industry best practices for temperature management, and use environmentally friendly products with zero ozone depletion potential or with a global warming potential (GWP) of less than 100.
According to Manohar Khiatani, senior executive director of CLI, the acquisition is in line with the group’s digitalization investment theme and will strengthen its presence in Japan, one of its focus markets. Khiatani also states that CLI’s strong financial standing allows them to strategically invest in high-quality assets, including data centres for their future private funds. He notes that Japan is a Tier 1 data centre market which is expected to experience immense growth.
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Japan is projected to have a compound annual growth rate (CAGR) of 10% from 2023 to 2038, reaching US$38.7 billion. Additionally, with a capacity of 1.4 gigawatts, Japan is currently the largest data centre market in Asia Pacific outside of China. Khiatani highlights that major cloud service providers such as Amazon Web Services, Google Cloud, Microsoft Azure, and Oracle already have a presence in Osaka, making the acquisition well-positioned to capture the demand in the city’s established data centre cluster.
Michelle Lee, managing director of private funds (data centre) at CLI, states that the demand for data centres is expected to continue growing at a double-digit rate, exceeding the supply of new data centres. She also says that there is significant institutional interest in data centre investments, with 97% of investors planning to increase their overall investment in this sector.
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Since October 2020, CLI has raised US$600 million for its data centre development funds in Asia and will use this momentum to identify potential investment opportunities for its private fund investors. The group has added 23 data centres to its global portfolio this year, and the CapitaLand Group now has 27 data centres across Asia and Europe with a total power capacity of 800 MW and $6 billion in assets under management.
On Feb 3, shares in CLI closed at $2.42, down 1.63% or 4 cents. In addition to this recent development in Japan, CLI has also announced its plans to increase its presence in Australia with an A$200 million acquisition.