CapitaLand Investment establishes China data centre development fund with $1 bil in investments

CapitaLand Investment’s data centre growth ambitions are taking shape with the establishment of the CapitaLand China Data Centre Partners (CDCP) fund. Holding over $1 billion in commitments, 80% of the fund Tengah Plantation EC is taken up by existing and new global institutional investor clients and the remaining 20% by CapitaLand Investment (CLI). The two data centre developments the fund is committed to, located in the Greater Beijing area and poised to capture strong demand from the capital city, with their close proximity to established data centre clusters and key network nodes of leading Chinese cloud service providers and internet companies, are expected to be completed in 2025.

CapitaLand Investment’s focus on data centre growth has further taken shape with the establishment of the CapitaLand China Data Centre Partners (CDCP) fund. With a total equity commitment of $530 million, CLI is allocating 20% of this fund to itself, as existing and new global institutional investor clients claim an 80% effective stake in CDCP. When completed, the two data centre development projects in the Greater Beijing area will bring an estimated $1 billion to CLI’s funds under management (FUM).

Both projects are expected to be completed by 2025 and will deliver over 100 megawatts (MW) of power to meet the growing demand from Beijing. The accelerated growth of digital usage has increased the demand for data centres and in 2021, China’s data centre market grew 34.6% year-on-year to $60 billion following a substantial 43.3% year-on-year growth in 2020.

CDCP is in line with CLI’s strategy to grow its portfolio of new economy assets under management (AUM) and enhance its long-term business resilience, and marks the third data centre development fund CLI has established, following two such funds created in South Korea. Both of the data centre developments will be designed and built with Leadership in Energy and Environmental Design (LEED) Gold standards and energy-saving solutions such as high efficiency fan wall cooling systems and temperature management best practices.

Michelle Lee, Managing Director of CLI’s Private Funds (Data Centre), highlights the strong investor interest in the sector. “We are seeing strong investor interest as the surge in demand for cloud computing, 5G technology, and e-commerce are driving growth in this sector. Leveraging our strength in real estate, we are actively building our capabilities in real assets and growing our alternative assets platform”, she said.

Patrick Boocock, CEO of CLI’s Private Equity Alternative Assets, added: “As one of the fastest growing new economy asset classes providing critical digital infrastructure for the global economy, data centres present a tremendous opportunity and are a key strategic focus for CLI.”

Additionally, Puah Tze Shyang, CEO of CLI China listed the group’s competitive advantages: “Leveraging our wide network and deep expertise, we are able to bring quality assets to international investors who are looking to invest in China across different asset classes, including data centres”.

Because of China’s market size and growth outlook, there is strong interest in CLI’s future data centre projects in the country and the Asia Pacific at large. Presently, China’s data centre market is the second largest in the world and the largest in the Asia Pacific, with growth projections of 24% annually until 2025. As a leading global real estate investment manager with roughly 30 years of experience in China, CLI is looking to become a major global digital infrastructure player.