GLP, a Singapore-based real estate developer, announced that it will invest 1.5 trillion yen ($13 billion) over the next few years to build its first portfolio of data centres in Japan’s major cities to meet rising demand for such facilities that power e-commerce and other digital platforms. Their further development into data centres is a natural extension of their aim to deliver vital infrastructure systems to enable expanding digitalization in the new economy.

GLP plans to develop data centers primarily in the greater Tokyo and Osaka regions, with a combined capacity of 900 megawatts (the scale of such facilities are defined by their power consumption). It has already secured land to build its first data center campus with a 600 megawatt capacity in the greater Tokyo area. Ground breaking for this project is expected next year, with the first building expected to be ready for service.

GLP is creating data centres with a combined capacity of 2,500 megawatts across Asia and Europe, backed by investors such as Chinese billionaire Zhang Lei’s Hillhouse Capital, Bank of China, HOPU Logistics Investments, and Vanke Real Estate. The company’s pipeline of assets in China will total 1,400 megawatts of capacity. In addition, it has secured premier data centre locations in Europe. Data centres are expanding across Asia Pacific because to the rapid rise of e-commerce, video conferencing, and other digital platforms.

Other developers are increasing their data centre investments, with Hong Kong-listed ESR Cayman establishing facilities around Asia Pacific with a total server capacity of approximately 250 megawatts and a gross asset value of more than $11 billion. Singapore’s sovereign wealth fund GIC and Equinix, based in the United States, announced a $525 million joint venture last month to build two hyperscale data centres in South Korea.

GLP is considering collecting more funds to help grow its data centre platform in China, which is seeing increased investor demand for digital infrastructure assets. GLP has begun reaching out to other digital sector companies and investment funds to gauge interest. GLP is one of China’s largest independent data centre operators, and its assets, including those now under construction, will help deliver around 1,400 megawatts of IT capacity once completed.

The funds raised could be used to grow GLP’s data centre platform both organically and through acquisitions. During the coronavirus epidemic, digital infrastructure assets such as data centres were desirable commodities as platforms supporting everything from video streaming to online gaming grew in popularity.

Financial investors and industry players seeking scale through mergers are becoming more interested. GDS Holdings, a Chinese data centre provider, had considered merging its operations with GLP’s data centres in China. Last year, the DigitalBridge Group, a digital infrastructure investment business, paid US$750 million for the data-center assets of Hong Kong-based telecoms carrier PCCW.

Data infrastructure, renewable energy, and related technologies have all been added to the company’s portfolio. It operates in 17 countries and manages around US$119 billion in assets. Japan is the world’s third-largest economy, and Tokyo is the largest cluster of data centers in the Asia Pacific region. It’s got 489MW of capacity, with the same amount in the pipeline.

In two ways, the epidemic has aided the cloud’s spread in Japan. It has prompted a shift to online working, as it has elsewhere. Customers in the Asian region, on the other hand, are fully aware of potential supply chain issues and are eager to reserve space ahead of time. It’s common knowledge that everyone’s supply chain will be disrupted. Customers are attempting to foresee the future of their product. And the best way to achieve it is to start looking for data centre space right now.

The two biggest challenges for Japanese data center operators are power and land. “Each country has its own nuance, and challenges that pop up with land and power. In Japan, power is a big issue. They have been able to find a location where power is not an issue.”

Tokyo has been the primary cluster for data centers for some time. There’s a strong market developing around Osaka, but most exciting areas now are in Tokyo suburbs, as that core market develops.

The first generation of data centres in the region were located in the central business district. Then the eastern side of Tokyo, known as the Inzai region, which is in the cheaper district, began to emerge. That’s where a lot of data centre expansion has happened recently. However, the power has been turned off there. In the approaching years, there is no possibility of power availability.

They’ve been able to secure power in Saitama City. The hyperscalers have determined that the eastern side will be topped out, and Saitama will be the next logical place for them to create a cluster. One of Microsoft’s initial data centres in Japan was in Saitama City, with a second site in Osaka.

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