CapitaLand Investment (CLI) has announced the acquisition of a freehold land parcel in Osaka, Japan, marking its first foray into the Japanese data centre market. With a total investment of over US$700 million or $944.3 million, the development will involve securing 50 megawatts (MW) of power capacity to support artificial intelligence (AI) capabilities. CLI has stated that the data centre will incorporate energy-saving solutions, such as advanced cooling technologies and best practices in temperature management. The company also plans to use products with low ozone depletion potential or global warming potential (GWP) of less than 100 to reduce its environmental impact.
CLI’s senior executive director, Manohar Khiatani, who oversees the group’s data centre business, expressed his excitement for the project, saying that it aligns with CLI’s digitalisation investment theme and strengthens its presence in Japan, one of its key markets. “CLI’s robust balance sheet gives us a competitive advantage in strategically investing in high-quality assets such as data centres for our private funds in the future,” says Khiatani. He also notes that Japan is a Tier 1 data centre market that is expected to experience significant growth.
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According to Khiatani, the Japanese data centre market is projected to grow at a compound annual growth rate (CAGR) of 10%, reaching US$38.7 billion in 2038 from US$23.8 billion in 2023. He also highlights that Japan is the largest data centre market in Asia Pacific, after China, with a current capacity of 1.4 gigawatts. “With global cloud service providers like Amazon Web Services, Google Cloud, Microsoft Azure, and Oracle already present in Osaka, our acquisition is well-positioned to meet the demand in Osaka’s established data centre cluster,” adds Khiatani.
Michelle Lee, CLI’s managing director for private funds (data centre), also acknowledges the increasing demand for data centres and predicts double-digit growth in the coming years. “As 97% of investors plan to increase their overall investment in data centres, there is strong institutional interest in this sector,” says Lee. She also mentions that CLI has raised US$600 million since October 2020 for its data centre development funds in Asia and plans to identify additional investment opportunities for its private fund investors to continue this momentum.
With this acquisition, CLI has now added 23 data centres to its global portfolio since 2021. CapitaLand Group, CLI’s parent company, has a total of 27 data centres across Asia and Europe, with an asset under management of approximately $6 billion and a capacity of 800 MW. On February 3, shares in CLI closed at $2.42, a 1.63% decrease.