Concrete Analysis | How Hong Kong can boost the development of data centres and emerge as a regional hub
- Demand for data centre services from users of cloud computing, e-commerce and high-frequency trading in Hong Kong has never been greater
- Provision of suitable land supported by well-developed infrastructure is of utmost importance, if Hong Kong is to become an international data centre hub in Asia-Pacific
Data centres are instrumental to the successful development of Hong Kong’s pillar industries, being integral to the efficient operation of financial, trading and logistics services in the city.
With the rapid development of global telecommunications and the growing emphasis on technological advancement for daily convenience, the demand for high-tier data centre services from users of cloud computing, e-commerce and high-frequency trading has never been greater in Hong Kong.
According to a December 2013 LegCo paper, the government had originally reserved three sites in Tseung Kwan O for data centres. After the first site was sold, the remaining adjoining sites were consolidated into one. All the sites were eventually acquired by the same data centre operator.
Market interest in industrial land remains very keen, as witnessed by the record transaction price during the recent sale by the government of an industrial site in Sha Tin, which was bought through public tender by the world’s largest wireless network operator, China Mobile. The fierce competition among developers and other tenderers for this lot justifies government alarm over the shortage of data centres, and the urgency of raising the supply of land for them.
Amid the ongoing expansion of data centre services in Hong Kong, it is clear that the government is unable to meet the ever-rising demand for land. There exists substantial demand for small-scale cloud calculation data centres, many of which might not need an entire data centre block.
In 2012, the government introduced a policy to promote the conversion of industrial buildings for data centre use. The fee for changing parts of industrial buildings aged 15 years or more into data centres was waived. The exemption is still applicable to data centres of all tiers. Since the conversion of industrial buildings into data centres now involves drastically reduced development costs, the landlords of old industrial assets have another incentive to revitalise and convert their buildings into higher value data centres. It is, therefore, reasonable to infer that this government policy will greatly stimulate the supply of small-scale data centres, helping to meet the demand of several businesses.
