SINGAPORE: Singapore continues to be Asia Pacific’s top location for operation of data centres, according to a report released by Cushman & Wakefield on Thursday (Oct 19).
The study by the real estate services company placed the city-state as the most robust market out of 10 Asian hubs in terms of business operations for data centres.
Singapore’s top score of 84.5 out of 100 in the index was ahead of South Korea's 83.23, Hong Kong's 78.73 and Japan's 76.48.
The index looks at factors such as energy, the ease of doing business, political stability, natural disaster and energy stability, as well as Internet bandwidth.
It showed Singapore performed strongly on network infrastructure and its connectivity to major Asia Pacific markets, pro-business environment and political stability.
The study also expects data centre supply in Singapore to grow by between 15 and 18 per cent in the next year and data centre occupancy rates to reach 70 per cent by the end of 2018.
Ms Christine Li, head of research at Cushman & Wakefield Singapore, said over 2.5 billion gigabytes of data – equivalent to a high-definition video being played non-stop for 90 years – is generated each day worldwide in the form of emails, documents, photos and videos, and data centres serve as the backbone that facilitate the transmission of this data.
MARKET TO HIT S$1.6B IN 2020
A separate report by Singapore research firm Structure Research showed income from data centres are expected to hit about S$1.2 billion this year, up 9 per cent from S$1.1 billion last year.
Looking ahead, the report said the industry boom is set to lift market value to some S$1.6 billion by 2020, citing big data analytics, cloud computing and data recovery as the main growth drivers.
The lucrative prospects in data centres have also prompted business tycoon Oei Hong Leong to invest S$6.73 billion to set up a new company named One Belt One Net that will build data centres, procure equipment and machinery, develop software, and recruit and train employees.
Mr Oei said he expects the data storage business in Singapore to benefit from China's Belt and Road Initiative which is aimed at promoting infrastructure development spanning Asia, the Middle East and Europe.
Mr Jabez Tan, research director for data centres at Structure Research, said Mr Oei’s move has caught the industry off-guard because of the large sum involved.
“His strategy is one that not only spans Singapore, but all across Asia, so he’s looking at a pan-Asian data centre platform and that requires more than just S$6 billion or S$7 billion in investments. Nonetheless, it’s still a good way to start and it would definitely help to increase Singapore’s exposure as the lighthouse country in Asia for the development and growth of data centres.”
SCARCITY OF LAND IN SINGAPORE?
Structure Research’s data also showed data centres are projected to occupy 2.5 million sq ft of space by 2020, compared to the current 2.3 million sq ft this year.
Therefore, data centre operators in Singapore could face a land shortage.
Mr Tan said: "Land scarcity is definitely a big issue because data centres tend to take up a notable amount of land, but what we also see is that data centres consume a lot of power because the servers within the data centres emit a lot of heat and that requires a lot of cooling capacity to cool them. Otherwise, there will be a lot of data centre failures.”
“To cool these facilities, people have sought climate-friendly regions like in the Nordics, but in Singapore you don't have that kind of favourable climate because it's tropical weather; people have tried underground to have a cooler environment to cool the data centre racks."
In fact, the first underground data centre is set to be deployed soon.
JTC has launched the concept and price tender for the project InfoComm Media Space Two located along Portsdown Road at Media Circle in one-north on Aug 31.
The site has an allowable gross floor area of 74,292 sq m, and a tenure of 30 years. The tender will close at 11am on Jan 30 next year.
CONVERTING INDUSTRIAL PROPERTIES INTO DATA CENTRES
Mr Lynus Pook, associate director of the Data Centre Advisory Group at Cushman & Wakefield, said another way that data operators can cope with the issue of land scarcity is through the conversion of brownfield industrial properties.
“The conversion reduces the construction risk and construction timeline as well. Time to the market is also faster, but it's not easy to match, so that's the reason why there is a premium of at least 20 per cent pegged to the industrial properties. Converting brownfield industrial properties into data centres will take between nine to 12 months, whereas to convert from a greenfield, it will take between 15 to 24 months."
However, Mr Pook warned that not all existing industrial properties can meet the criteria for conversion. For example, a floor to ceiling height of at least 5m, at least 120,000 sq ft of gross floor area (GFA) space and at least 30,000 sq foot of unused GFA to install mechanical and electrical equipment.
The building ahould also be away from flood prone estates, airfields and petrol chemical plants like petrol kiosks.
Mr Pook highlighted that the conversion is also ultimately subjected to approval by the relevant governing authorities like JTC and Housing and Development Board, which means that if industrial areas are zoned for logistics, food or semi-conductor industries, then the chance of its conversion into a data centre will be slim.
Mr Tan pointed out that picking the right timing to deploy data centre capacities in Singapore is crucial as well.
“Data centres take about two years from conception until deployment. Companies have to make sure that when they deploy data centre capacity that it’s not during a period of oversupply, where everyone’s deploying them at the same time. That’s because if there’s too much capacity in the market, that leads to price erosion so there’s a lot of competitiveness when it comes to pricing your data centre product and that impacts a company’s bottomline and margin so I think prudent investment in the space is key.”
“And because there are a lot of players - both local and international - in Singapore, we might see some consolidation and some mergers and acquisitions happening in the Singapore data centre scene in the next 24 months,” he added.