Listed development giant Lendlease has announced plans to launch $1.42 billion worth of data centres across the Asia-Pacific region.
Lendlease will partner with an unidentified investor believed to be from Singapore, with an initial equity injection of $700 million. The partnership will be 20 per cent funded by Lendlease and 80 per cent by the unidentified investor.
Lendlease will spearhead development, construction, property and investment management for the partnership as they target existing centres and development opportunities in south-east Asia and Australia.
The partnership is Lendlease’s second venture in the fast-growing data centre and telecom sector.
Demand for data centres is being driven by accelerated growth in what is known as “multi-cloud” adoption around the world, and will be further accelerated with the roll-out of 5G, according to a JLL report on the global data centre outlook.
Lendlease chief executive for Asia Tony Lombardo said the data centre platform was a strategic fit for the group, aligning with its targeted key trend of infrastructure, telecommunications strategy and integrated business model.
“This partnership will enable us to leverage our track record of project managing, designing and building data centres with the strong growth potential for this sector, which is evolving into a mainstream real estate asset class,” Lombardo said.
Singapore, with 44MW of data centres currently under construction, leads the Asia-Pacific region in cloud providers, while locally, groups including NextDC, Digital Realty, Global Switch and Equinix are expanding data centres to meet the increasing demand.
Data centres have been an exciting asset class for investors in recent years, as the increasing dependence on cloud storage creates an unremitting demand for space to store data.
As the world becomes increasingly reliant on the internet — and mobile usage in particular — data is being seen less as a measure of information and more a public utility, like water or gas.
The data centre market continues to grow with infrastructure needed to support the likes of Microsoft Azure, Amazon Web Services, Google Cloud and Alibaba Cloud.
The sector has grown steadily, averaging 12.2 per cent annually over the past five years within Australia, and is worth an estimated $2.5 billion.
Global data usage is now anticipated to rise from 50,000 petabytes to 700,000 by 2021, underscoring market signals for strong and continuous growth potential.
Investors are now looking to take advantage of the significant growth forecast for the budding asset class.
The Asia Pacific has been identified as one of the key growth regions internationally as major corporations step up their use of cloud storage, and Singapore has been a leader in the region.
According to CBRE, the Asia Pacific data centre market is continuing to expand, with colocation supply across the four tier I markets of Hong Kong, Singapore, Sydney and Tokyo totalling 1,119mw in the first quarter of this year.
Local data centre specialist providers including NEXTDC and Canberra Data Centres as well as global providers including Nasdaq-listed data centre giant Equinix have all expanded their Australian presence significantly over the last few years.
Equinix announced it would spend $225 million to build its largest Australian facility in Sydney after already paying more than $1 billion in 2017 to buy local provider Metronode.
New providers including Singapore digital start-up Airtrunk and Data Exchange Network are entering the Australian market.
AirTrunk raised $400 million in 2017 to fund the construction of its flagship centres in Sydney and Melbourne.
AirTrunk is also turning its attention toward new opportunities in Hong Kong and Tokyo after successfully securing $650 million in financing for its proposed data centre in Singapore.
ASX-listed data centre operator NextDC has already flagged separate plans to invest $2.25 billion in three new sites it has acquired in Sydney, Melbourne and Perth as prepares for a surge in demand for data storage.