Hong Kong - Data Centre Market
As data centres become larger and more efficient, new data centres are generally being built in centralised areas, in order to achieve the required economies of scale. Hong Kong has developed to become regional hub for large enterprises across a range of industries. Most large international providers are focusing on Hong Kong in order to build a geo-redundant hyper multi-cloud architecture.
Hong Kong is one of the few locations in Asia that has a reliable and stable supply of electricity, advanced telecoms infrastructure with good fibre connectivity and is sheltered from natural disasters.
Hong Kong is a major financial and international trading and logistics hub and is home to many regional offices and headquarters of global corporations. This generates strong demand for secure data centre facilities and services. Its proximity to the Mainland of China is also a core strength.
The Asia-Pacific region is currently undergoing very strong wholesale colocation growth driven by large-scale international cloud providers including Amazon Web Service (AWS), Google, Microsoft and IBM as they expand aggressively in major hubs including Sydney, Melbourne, Singapore, Hong Kong and Tokyo.
IT service providers a such as Fujitsu and IBM are increasingly renting wholesale data centre space from specialist data centre providers as they consolidate their data centre footprint into a smaller number of larger, newer and more efficient data centres. Rather than paying for costly refurbishments, they are shutting down smaller, lesser efficient non-strategic data centres and supplementing their own services. Local Hong Kong telcos are also consolidating their data centre footprint.
Hong Kong has shifted from seeing growth in the financial services, securities, and insurance verticals to growth driven by large-scale cloud and content providers. While data centre construction was initially led by financial service and IT companies, it is now the large global multimedia companies that will drive data centre construction over the next five years.
Nearly all the major hosting and cloud providers globally have built a presence in Hong Kong. In particular, hyperscale and international public cloud service providers and digital media content providers such as Amazon Web Services (AWS). Google, Facebook and Alibaba Cloud have been key in driving demand for data centre services, significantly increasing their uptake of data centre capacity in Asia and particularly in Hong Kong over the past few years, by building massive-scale platforms.
Cloud operators have overtaken financial service clients to be the largest occupiers of data centres. In turn, multimedia content providers and cloud companies are driving strong demand for data centre storage and networking in Hong Kong.
While current data centre sites are sufficient to support immediate demand, Hong Kong needs cheaper land options for data centre usage and government support to achieve its long-term goal as a data centre hub and smart city.
Over the next five to ten years the Hong Kong data centre market will face mounting challenges with a lot of new local supply entering the market, and a growing secondary market in neighbouring countries, where some potential new business will go to surrounding, cheaper markets such as Indonesia and Malaysia which are very quickly developing their data centre markets.
Data centre specialists (both local and international), have grown significantly over the past few years, especially the international data centre specialists, as a number of telcos and IT service providers have fully or partially retreated from the data centre market.
Hong Kong has implemented a strategy to facilitate the development of data centres in Hong Kong.
This includes providing land for data centre use such as the Hong Kong Science and Technology Parks Corporation (HKSTPC).
Other concentrations of data centres can be found in Tseung Kwan O Industrial Estate.
Cloud operators have overtaken financial service clients to be the largest occupiers of data centres.
Over the next five to ten years the Hong Kong data centre market will face mounting challenges.
Companies covered in this report include:
Global Switch, Telehouse, Equinix, Digital Realty, Cyxtera, SUNeVision (iAdvantage), iTech Tower, PCCW, HKEX, HGC GlobalCentre, OneAsia, IBM, Fujitsu, NTT (HKNET), China Mobile International, Telstra, AT&T, Citic Telecom, Epsilon, Telekom Malaysia Berhad (TM), Towngas Telecom (TGT), Singtel
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