CapitaLand Investment (CLI) has recently completed the acquisition of a freehold land parcel in Osaka, marking its first data centre development project in Japan. This development is a significant investment, totaling over US$700 million or $944.3 million. The project has secured 50 megawatts (MW) of power capacity.
CLI has stated that the new data centre will be equipped to support the growing demand for artificial intelligence (AI) capabilities. The data centre will incorporate advanced cooling technologies and follow industry best practices for temperature management in order to reduce energy consumption. Additionally, the project will use products with zero ozone depletion potential or with a global warming potential (GWP) of less than 100 to minimize its environmental impact.
Manohar Khiatani, senior executive director of CLI and overseer of the group’s data centre business, explains that this acquisition is in line with the company’s digitalization investment theme and will expand its geographical reach. Japan, which is one of CLI’s focus markets, will see a deepening of the group’s presence as a result of this acquisition.
Khiatani also points out that Japan is considered a Tier 1 data centre market with forecasted significant growth opportunities. Projections show a compound annual growth rate (CAGR) of 10%, which is expected to increase from US$23.8 billion in 2023 to US$38.7 billion in 2038. Furthermore, with a 1.4 gigawatt capacity, Japan is the largest data centre market in Asia Pacific, outside of China.
The city of Osaka, where the new data centre will be located, has already attracted major cloud service providers such as Amazon Web Services, Google Cloud, Microsoft Azure, and Oracle. This strategic positioning has put CLI in a favorable position to meet the high demand for data centres in this established cluster.
Michelle Lee, managing director of private funds (data centre) at CLI, notes that the demand for data centres will continue to grow and exceed new supply in the market. She adds that there is strong institutional interest in data centre investments, with 97% of investors planning to increase their overall investments in this sector.
In October 2020, CLI has raised approximately US$600 million for its data centre development funds in Asia. Lee states that the company intends to leverage this momentum and identify attractive investment opportunities for its private fund investors.
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CLI has already added 23 data centres to its global portfolio in 2021 and currently manages around 800 MW of power and US$6 billion in assets on a completed basis, across Asia and Europe. This new acquisition demonstrates the company’s commitment to expand its presence and increase its investments in data centres.
On 3rd February, shares in CLI closed 4 cents lower, or 1.63% down, at $2.42.