Data center real estate investment trusts (REITs) based out of Singapore are capitalizing on Japanese compute demand for enterprise, cloud, and AI workloads while competition for power-ready assets intensifies.
Analysts speaking with The Business Times noted that recent deals announced by Singapore data center REITs in Japan highlight the appetite for high-quality, operational data centers in the country, especially if they are fully fitted and have long-term access to power.
“In today’s environment, especially in Japan, power availability itself has become one of the most valuable attributes of a data centre asset,” Pritesh Swamy, Cushman & Wakefield Head of Data Centre Strategic Consulting, Research & Valuation Services, Asia Pacific, told The Business Times.
“Overall, we believe infrastructure constraints, particularly power availability, are likely to remain one of the key challenges for sector growth over the next two years,” added Swamy.
W.media reported in August that Singapore-listed Digital Core REIT would sell its interest in three North American assets to acquire partial interests in one data center in Osaka, Japan, and another in Singapore. The sale would also pay down Digital Core REIT’s debt and repurchase units on the open market.
Earlier this month, Keppel DC REIT, based out of Singapore, announced it was set to acquire an 88.62 percent interest in two hyperscale data centers in Inzai City, Greater Tokyo, for JPY 168.4 billion (US$ 1.05 billion).
Swamy reports that Japan has operational capacity of more than 1.8 GW, its vacancy rate sits at 6.6 percent. As much as 3.5 GW of additional capacity is set to be developed by 2030, but 40 percent of under-construction capacity and 26 percent of planned capacity is already pre-leased.
At the same time, land prices have skyrocketed with JLL reporting in February that a site in Greater Tokyo sold at a 770 percent premium over official land prices.
Japan’s data center market is set to explode in value with Arizton Advisory & Intelligence forecasting that the market value will grow from US$ 12.76 billion in 2025 to US$ 38.92 billion by 2030. REITs offer a way to grow that investment further, provided they can navigate the constraints of the Japanese market effectively.