CapitaLand Investment launches China data centre development fund

CapitaLand Investment Limited (CLI) has established a China data centre development fund, CapitaLand China Data Centre Partners (CDCP).

CDCP has committed to invest in two hyperscale data centre development projects in Greater Beijing, and upon completion of the projects, will add approximately S$1 billion to CLI's funds under management, according to a statement.

Total equity committed to CDCP is S$530 million, with existing and new global institutional investor clients holding an 80% effective stake in CDCP, and CLI holding the remaining 20%.

CDCPs establishment is in line with CLI's strategy to grow its portfolio of new economy assets under management and enhance long-term business resilience.

The data centre development projects are expected to be completed in 2025 and will deliver over 100 megawatts (MW) of power to meet growing demand from the worlds most populous national capital city.

Located close to established data centre clusters and key network nodes of leading Chinese cloud service providers and internet companies, the two data centres are poised to capture strong demand from Beijing.

Patrick Boocock, CEO, Private Equity Alternative Assets, CLI, who also oversees the growth of CLIs global data centre business, says, "As one of the fastest growing new economy asset classes providing critical digital infrastructure for the global economy, data centres present a tremendous opportunity and are a key strategic focus for CLI. We have built core competencies in data centre design, development, commercial sales and operations, with 26 data centres across Asia and Europe that will offer more than 500 MW of power on a completed basis.

"We are seeing strong investor interest as the surge in demand for cloud computing, 5G technology, and e-commerce are driving growth in this sector. Leveraging our strength in real estate, we are actively building our capabilities in real assets and growing our alternative assets platform. CDCP is our third data centre development fund, following the establishment of two such funds in South Korea. We are excited to bring our capabilities to the China market and advance our ambition of becoming a major global digital infrastructure player."

Puah Tze Shyang, CEO of CLI China, says, "As a leading global real estate investment manager with about 30 years of experience in China, we are able to leverage our wide network and deep expertise to bring quality assets to international investors who are keen to invest in China across different asset classes including data centres.

"CLI's competitive advantage lies in our position as a vertically integrated group in China with a full range of capabilities, from investment sourcing, development, having a strong customer network to operations. We have S$46 billion of assets under management in China."

Michelle Lee, Managing Director, Private Funds (Data Centre), CLI, says, "CDCP will invest in two highly sought-after data centre projects in prime locations. Chinas data centre market is currently the second largest in the world and the largest in Asia Pacific, and is projected to grow 24% annually until 2025. There is strong interest in CLIs future data centre projects in China and Asia Pacific at large, and we are actively seeking to grow in this sector."

The accelerated growth of digital usage in China is driving demand for data centres. In 2021, Chinas data centre market grew 34.6% year-on-year to S$60 billion, following an impressive 43.3% year-on-year growth in 2020 partly due to increased online demand amid COVID-19.

In keeping with its 14th Five-Year Plan, China aims to increase the contribution of digital economy businesses to its GDP to 10% by 2025. It is increasing its support for 6G research and development as well as boosting innovation in strategic industries. Against this background, cloud computing has emerged as a critical component of digital technology, with Chinas public cloud service market growing 35% in 1H 2022.

CapitaLand has a portfolio of 26 data centres in Asia and Europe with total assets under management of S$6 billion on completed basis. Its vertically integrated data centre capabilities in Singapore, China, India, South Korea and Europe enable it to value add at every stage of the assets life cycle. Leveraging CLIs fund management capabilities, CLI set up its first data centre fund in October 2020 and a second data centre fund in May 2021 with 100% third-party capital.

The two data centres will be designed, built and certified against Leadership in Energy and Environmental Design (LEED) Gold standards. They will incorporate energy-saving solutions, such as high efficiency fan wall cooling systems, adopt temperature management best practices, and recycle waste heat from the servers to heat offices.

Together, these eco-friendly solutions and initiatives can achieve over 20% in energy savings when compared to other data centres using conventional cooling and heating systems. The data centres will also feature rooftop solar energy harvesting systems to generate on-site renewable power to reduce carbon footprint, as well as intelligent infrastructure management systems which optimise and improve the energy efficiency of the operating systems.