CapitaLand invests USD $700m in Osaka data centre project

CapitaLand Investment has acquired a freehold parcel of land in Osaka, Japan, to develop its first data centre in the country, marking an investment exceeding USD $700 million (SGD $944.3 million).

This acquisition includes securing 50 megawatts (MW) of power capacity, adding to CapitaLand Investment's portfolio of 23 data centres acquired since 2021. Overall, CapitaLand Group now boasts 27 data centres spanning Asia and Europe, managing approximately 800 MW of power and assets valued at around SGD $6 billion on a completed basis.

Mr Manohar Khiatani, Senior Executive Director of CapitaLand Investment, said, "CLI's data centre portfolio has expanded significantly over the last few years and we are delighted to expand our footprint to Japan. The acquisition is not only aligned with CLI's digitalisation investment theme but also enhances CLI's geographical spread, deepening its presence in Japan, one of CLI's focus markets. CLI's strong balance sheet gives us the distinct advantage to invest strategically in quality assets including data centres for our future private funds."

He highlighted Japan's potential in the data centre sector: "Japan is a Tier 1 data centre market poised for tremendous growth. It is projected to expand at a compound annual growth rate of 10%, from USD $23.8 billion in 2023 to USD $38.7 billion in 2028. It is also Asia Pacific's largest data centre market outside of China with a 1.4 gigawatt capacity, with both Tokyo and Osaka being key data centre hubs in the region. Major cloud service providers such as Amazon Web Services, Google Cloud, Microsoft Azure and Oracle already have a presence in Osaka. Our acquisition is hence well-positioned to capture demand in Osaka's established data centre cluster."

Ms Michelle Lee, Managing Director of Private Funds (Data Centre) at CLI, noted the rapid climb in data centre demand due to the rise in digitalisation and AI, particularly in Asia. "With the rapid adoption of digitalisation and artificial intelligence (AI) globally and especially in Asia, data centre demand is expected to enjoy double-digit growth and outstrip new supply. There is strong institutional interest in data centre investments, with 97% of investors planning to increase their overall investment in data centres," she said.

Ms Lee also emphasised CLI's approach to opportunities: "Leveraging CLI's global network and on-ground expertise, we have secured this off-market opportunity in Osaka with 50 MW of power. Since October 2020, CLI has successfully raised about USD $600 million (SGD $810 million) for our data centre development funds in Asia. CLI continues to develop new data centre fund products. We will also build on our investment momentum and identify compelling investment pipeline opportunities for our private fund investors."

The new data centre in Osaka is described as AI-ready, incorporating advanced designs focusing on sustainability. It will meet standards like the Leadership in Energy and Environmental Design (LEED) or similar Japanese green-certification measures. Energy and water efficiency will be boosted through advanced cooling solutions and temperature management practices, while the materials used will have minimal environmental impact.

CapitaLand Investment maintains a strong presence in the data centre sector worldwide. Thanks to its experience in the development and operation of such facilities, CLI has built up a notable reputation and strong partnerships to exploit the opportunities this sector offers. In India, CapitaLand India Trust (CLINT) recently secured a long-term agreement with a prominent cloud service provider for its centres currently under development, supporting its strategy through significant pre-leasing arrangements in various key regions.

The CapitaLand Group holds data centre investments in nine countries, including regions such as South Korea, India, China, the UK, France, and the Netherlands, reflecting a robust and diversified international strategy.