Hong Kong also ranked the fourth most attractive data center location in APAC

HONG KONG, CHINA - Media OutReach - 31 August 2020 - Investment into data centers in Asia Pacific (APAC) is on the rise with the totaltransaction volume between 2018 and 2020 totalling USD 5.70 billion, 7.2x thatbetween 2015 and 2017. Despite the pandemic outbreak, investment activity inthe sector remains relatively robust with the total transaction volume in APACover the first eight months of 2020 reaching USD 1.43 billion, about 56% of the2019 level.

Highly sought after by investors and owner-operators, HongKong accounted for 54% of total investment into the APAC data center market in2020 to date. Among the most notable transactions, China Mobile secured anindustrial government site for HKD 5.60 billion in July. The record high A.V. ofHKD 5,967 per sq ft was 56% higher than the closest bid; demonstrating theeagerness of the buyer to secure a data center site amidst limited supply.

Hong Kong is an ideal data center location. Accordingto the latest research by Cushman & Wakefield, the city ranked the fourth mostattractive data center location in APAC, trailing Singapore, Sydney and Tokyo. HongKong ranked highest in terms of low tax rate and low climate risks and rankedin the middle in the categories of fiber connectivity, market maturity, and electricity costs. However, it scored poorly on its high realestate costs.

As of end-2Q20, total data center stock in Hong Kong amounted to 7.9million sq ft, of which 80% was dominated by 10 operators including the twolargest local operators -- SUNeVision and PCCW Solutions (which account for 31% ofthe market area). International operators collectively occupy around 30% andCushman & Wakefield expects theproportion of these non-local operators in the market will continue to increaseover the near-term due to their pre-commitments of new projects in the supply pipeline.

Overthe next four years, a combined 4.2 million sq ft of supply will enter the datacenter market. "Despite a 50% increase over the existing 7.9 million sq ftstock, supply will remain tight as 82% of theupcoming developments have already been taken up by owner-operators and tenant operators,"said Mr Eric Chong, Cushman & Wakefield's Associate Director of Research,Hong Kong.

"Existing data center demand is supported by banking & finance,insurance, and telecom operators. We expect future demand to be largely drivenby leading global cloud service providers such as AWS, Microsoft Azure, GoogleCloud, Tencent Cloud, and Alibaba Cloud," Eric added. "The growing importanceof Internet of Things (IoT) applications, the impending 5G network, and fastadoption rates of cloud computing as well as the post-COVID-19 'new' normal arethe four major factors driving the surge in demand for cloud storage". Based ongovernment statistics, 90% of corporates in the Finance, Insurance, Real Estate,and Business Services (FIREBS) sectors have already adapted cloud computing, a significantincrease from 57% in 2015.

Powershortages, however, are a major constraint on data center development. The existing11kV power supply network cannot meet the power demand of hyperscale datacenters, which require a minimum of 20MVA + 20MVA. It usually takes power companiesabout three to four years to provide the additional power supply which createsa gap of 1.5 to two years between the target commencement date of data centeroperations and delivery of the necessary power supply.

Goingforward, Cushman & Wakefield recommends the Hong Kong government and powercompanies to swiftly investigate and coordinate on how to increase power supplycapacity and shorten power delivery timelines to ensure the infrastructure isin place for future data center growth.

"To maintain the city's data center market competitiveness, thegovernment should consider allocating more land lots for data center use tosatisfy surging demand. Another consideration is to standardize land premiumrates for lease modification applications to give investors and owner-operatorsa predictable cost and timeline for data center redevelopment projects. Thegovernment should also consider empowering a centralized government unit tofacilitate and streamline the application and approval process of the worksrequired for data center developments currently handled by various governmentdepartments," concluded Mr John Siu,Cushman & Wakefield's Managing Director, Hong Kong.

About Cushman & Wakefield

Cushman & Wakefield (NYSE: CWK) is aleading global real estate services firm that delivers exceptional value forreal estate occupiers and owners. Cushman & Wakefield is among the largestreal estate services firms with approximately 53,000 employees in 400 officesand 60 countries. Across Greater China, there are 22 offices servicing thelocal market. The company won four of the top awards in the Euromoney Survey2017 and 2018 in the categories of Overall, Agency Letting/Sales, Valuation andResearch in China. In 2019, the firm had revenue of $8.8 billion across coreservices of property, facilities and project management, leasing, capitalmarkets, valuation and other services. To learn more, visit www.cushmanwakefield.com.hk or follow us onLinkedIn (https://www.linkedin.com/company/cushman-&-wakefield-greater-china)