CapitaLand Investment Limited (CLI) has established a China data center development fund, CapitaLand China Data Centre Partners (CDCP). CDCP has committed to invest in two hyperscale data center development projects in Greater Beijing, and upon completion of the projects, will add approximately S$1 billion to CLI’s funds under management.
Total equity committed to CDCP is S$530 million, with existing and new global institutional investor clients holding an 80% effective stake in CDCP, and CLI holding the remaining 20%. CDCP’s establishment is in line with CLI’s strategy to grow its portfolio of new economy assets under management and enhance long-term business resilience.
The data center development projects are expected to be completed in 2025 and will deliver over 100 megawatts (MW) of power to meet growing demand from the world’s most populous national capital city. Located close to established data center clusters and key network nodes of leading Chinese cloud service providers and internet companies, the two data centers are poised to capture strong demand from Beijing.
According to Patrick Boocock, CEO, Private Equity Alternative Assets, CLI, who also oversees the growth of CLI’s global data center business, as one of the fastest growing new economy asset classes providing critical digital infrastructure for the global economy, data centers present a tremendous opportunity and are a key strategic focus for CLI.
“We have built core competencies in data center design, development, commercial sales and operations, with 26 data centers across Asia and Europe that will offer more than 500 MW of power on a completed basis. 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. CDCP is our third data center development fund, following the establishment of two such funds in South Korea. We are excited to bring our capabilities to the China market and advance our ambition of becoming a major global digital infrastructure player.” said Boocock.
For Puah Tze Shyang, CEO of CLI China, as a leading global real estate investment manager with about 30 years of experience in China, they are able to leverage their wide network and deep expertise to bring quality assets to international investors who are keen to invest in China across different asset classes including data centers.
“CLI’s competitive advantage lies in our position as a vertically integrated group in China with a full range of capabilities, from investment sourcing, development, having a strong customer network to operations. We have S$46 billion  of assets under management in China.” said Shyang.
Furthermore, Michelle Lee, Managing Director, Private Funds (Data Centre), CLI, said that CDCP will invest in two highly sought-after data center projects in prime locations. China’s data center market is currently the second largest in the world and the largest in Asia Pacific  and is projected to grow 24%  annually until 2025. There is strong interest in CLI’s future data center projects in China and Asia Pacific at large, and we are actively seeking to grow in this sector.
China’s rapid digitalization driving demand for data centers
The accelerated growth of digital usage in China is driving demand for data centers. In 2021, China’s data center market grew 34.6% year-on-year to S$60 billion, following an impressive 43.3% year-on-year growth in 2020 partly due to increased online demand amid COVID-19. In keeping with its 14th Five-Year Plan, China aims to increase the contribution of digital economy businesses to its GDP to 10% by 2025. It is increasing its support for 6G research and development as well as boosting innovation in strategic industries. Against this background, cloud computing has emerged as a critical component of digital technology, with China’s public cloud service market growing 35% in 1H 2022.
CapitaLand’s global data center portfolio
CapitaLand has a portfolio of 26 data centers in Asia and Europe with total assets under management of S$6 billion on completed basis. Its vertically integrated data center capabilities in Singapore, China, India, South Korea and Europe enable it to add value at every stage of the asset’s life cycle.
Leveraging CLI’s fund management capabilities, CLI set up its first data center fund in October 2020 and a second data center fund in May 2021 with 100% third-party capital.
Green features of CDCP’s assets
The two data centers will be designed, built and certified against Leadership in Energy and Environmental Design (LEED) Gold standards. They will incorporate energy-saving solutions, such as high efficiency fan wall cooling systems, adopt temperature management best practices, and recycle waste heat from the servers to heat offices. Together, these eco-friendly solutions and initiatives can achieve over 20% in energy savings when compared to other data centers using conventional cooling and heating systems. The data centers will also feature rooftop solar energy harvesting systems to generate on-site renewable power to reduce carbon footprint, as well as intelligent infrastructure management systems which optimize and improve the energy efficiency of the operating systems.