Hong Kong experienced another solid year of growth at nearly 16%, despite the lack of land available for building, the research finds. Several providers still have room for expansion, but other important players are near or at capacity, and only two plots of land are earmarked for datacenter use. Analysts note that the industry will face challenges as it continues to grow, hence the reduced growth rate over the next three years.
“The Hong Kong datacenter market continues to see impressive growth, and in doing so has managed to stay ahead of its closest rival, Singapore, for yet another year,” said Dan Thompson, Senior Analyst at 451 Research and one of the report’s authors. However, with analysts predicting an 8% CAGR for Singapore over the next few years, Singapore’s datacenter revenue is expected to surpass Hong Kong’s by the end of 2019.
451 Research analysts found that, while the number of new builds in Singapore slowed in 2017, the market still saw nearly 12% supply growth overall, compared with 19% the previous year. The report notes that the reduced builds in 2017 follow two years when providers had invested heavily in building new facilities and expanding existing ones.
“Rather than seeing 2017 as a down year for Singapore, we see it as a ‘filling up’ year, where providers worked to maximize their existing datacenter facilities,” said Thompson. “Meanwhile, 2018 is shaping up to be another big year, with providers including DODID, Global Switch and Iron Mountain slated to bring new datacenters online in Singapore.”
Analysts also reveal that demand growth in both Hong Kong and Singapore has shifted from the financial services, securities, and insurance verticals to the large-scale cloud and content providers.
451 Research finds that Singapore’s role as the gateway to Southeast Asia remains the key reason why cloud providers are choosing the area. “Cloud and content providers are choosing to service their regional audiences from Singapore because it is comparatively easy to do business there, in addition to having strong connectivity with countries throughout the region. This all bodes well for the country’s future as the digital hub for this part of APAC,” added Thompson.
451 Research finds that Hong Kong’s position as the gateway into and out of China remains a key reason why cloud providers are choosing the area, as well as the ease of doing business there. This is good news for the city as long as providers find creative solutions to their lack of available land.
451 Research has also compared the roles of the Singapore and Hong Kong datacenter markets in detail. The analysts concluded that multinationals need to deploy datacenters in both Singapore and Hong Kong, since each serves a very specific role in the region: Hong Kong is the digital gateway into and out of China, while Singapore is the digital gateway into and out of the rest of Southeast Asia.
Analysts find that these two markets compete for some deals, but surrounding markets are vying for a position as well. As an example, Singapore sees some competition from Malaysia and Indonesia, while Hong Kong could potentially see more competition from cities in mainland China, such as Guangzhou, Shenzhen and Shanghai. However, the surrounding markets are not without challenges for potential consumers, suggesting that Singapore and Hong Kong will remain the primary destinations for datacenter deployments in the region for the foreseeable future.
