CapitaLand Investment (CLI) is entering the data centre market in Japan with its latest acquisition of a freehold land parcel in Osaka. The development of the data centre, which will entail a total investment of over US$700 million or $944.3 million, marks CLI’s first foray into the country.
The data centre, which will have a power capacity of 50 megawatts (MW), is set to be geared towards supporting artificial intelligence (AI) capabilities. CLI has announced that it plans to integrate energy-saving solutions such as advanced cooling technologies and adopt industry best practices in temperature management.
In line with CLI’s commitment to sustainability, the data centre will also prioritize the use of products with zero ozone depletion potential or with global warming potential (GWP) of less than 100, minimizing its environmental footprint.
According to Manohar Khiatani, senior executive director of CLI and head of the group’s data centre business, the acquisition aligns with CLI’s digitalization investment theme and strengthens its geographical presence in Japan, which is one of its key markets. “CLI’s strong balance sheet gives us the distinct advantage to strategically invest in quality assets such as data centres for our future private funds,” he adds. He also notes that Japan is a Tier 1 data centre market with tremendous growth potential.
With a projected compound annual growth rate (CAGR) of 10%, the Japanese data centre market is expected to reach US$38.7 billion by 2038, up from US$23.8 billion in 2023. Khiatani also highlights that Japan is the largest data centre market in Asia Pacific outside of China, with a capacity of 1.4 gigawatts.
“Our acquisition is well-positioned to capture the demand in Osaka’s established data centre cluster, with major cloud service providers such as Amazon Web Services, Google Cloud, Microsoft Azure, and Oracle already having a presence in the area,” Khiatani states.
Michelle Lee, managing director, private funds (data centre) at CLI, notes that the demand for data centres is set to see double-digit growth, outpacing new supply. She adds that there is strong institutional interest in data centre investments, with 97% of investors planning to increase their overall investment in this sector.
Since October 2020, CLI has raised approximately US$600 million for its data centre development funds in Asia. According to Lee, this recent acquisition in Japan will help the group build on its momentum and identify “compelling investment pipeline opportunities” for its private fund investors.
With this latest acquisition, CLI has added 23 data centres to its global portfolio in 2021 alone. CapitaLand Group now boasts a total of 27 data centres across Asia and Europe, with a combined power capacity of around 800 MW and assets under management of approximately $6 billion on a completed basis.
On Feb 3, shares in CLI closed 4 cents lower, or 1.63%, down at $2.42.