CapitaLand Investment (CLI) has recently made a significant move in the data centre industry with its latest acquisition in Osaka, Japan. The company has acquired a freehold land parcel to develop its first data centre in the country, which is estimated to cost over US$700 million or $944.3 million. This marks CLI’s first venture into the Japanese data centre market, and it is set to bring in 50 megawatts (MW) of power capacity.
When contemplating an investment in a Singapore Condo, it is crucial to also evaluate its potential rental yield. Rental yield refers to the annual rental income as a percentage of the property’s purchase price. In Singapore, condos can have varying rental yields depending on factors such as location, property condition, and market demand. Generally, areas near business districts or educational institutions tend to offer higher rental yields due to the high demand for rental properties. Carrying out thorough market research and seeking guidance from real estate agents can provide valuable insights into the rental potential of a specific Singapore Condo.
CLI has stated that this data centre will not only serve the demand for data storage, but also support the growing need for artificial intelligence (AI) capabilities. The company plans to incorporate advanced cooling technologies and implement industry best practices in temperature management to ensure energy efficiency. Additionally, CLI will also use products with zero ozone depletion potential or with a global warming potential (GWP) of less than 100 to reduce the environmental impact of the data centre.
Manohar Khiatani, senior executive director of CLI, who oversees the group’s data centre business, believes that this acquisition is in line with the company’s digitalisation investment theme. He also noted that it further strengthens their presence in Japan, one of their focus markets. “CLI’s strong balance sheet gives us the distinct advantage to invest strategically in quality assets, including data centres, for our future private funds,” he added. Khiatani also highlighted that Japan is a Tier 1 data centre market with tremendous growth potential.
The Japanese data centre market is expected to grow at a CAGR of 10% from US$23.8 billion in 2023 to US$38.7 billion in 2038. It is also the largest data centre market in the Asia Pacific region, excluding China, with a capacity of 1.4 gigawatts, according to Khiatani.
Michelle Lee, managing director of private funds (data centre) at CLI, believes that the demand for data centres will continue to grow in the coming years, surpassing the new supply. She also stated that there is a strong interest among institutional investors for data centre investments, with 97% of them planning to increase their overall investment in this sector.
CLI has raised US$600 million for its data centre development funds in Asia since October 2020. With this latest acquisition, the company plans to build on this momentum and identify potential investment opportunities for its private fund investors. CLI has already added 23 data centres to its global portfolio this year, bringing the total to 27 data centres across Asia and Europe. These data centres have a combined power capacity of around 800 MW and assets under management of approximately $6 billion.
On a closing note, it was announced that CLI has also acquired a significant stake in an Australian company for A$200 million, which will further expand its presence in the Australian market. CLI’s shares closed at $2.42, down 1.63% on February 3.