Nuveen unit buys first Hong Kong data centre for $371m

The Asia Pacific Cities Fund (APCF), part of US asset manager Nuveen, has acquired a data centre in Hong Kong, the fund’s first investment in the city.

The Cargo Consolidation Complex is a fully-occupied data centre totalling 270,000 square feet of gross floor area in the Kwai Chung district of Hong Kong.

APCF acquired the centre for HK$2.88 billion ($371 million) in what it described as “a rare off-market opportunity”.

“Hong Kong is a critical financial and technology hub and one of the most mature data centre markets in Asia with rich network connectivity, robust infrastructure and healthy market fundamentals, making this an important strategic investment,” Nuveen chief investment officer Louise Kavanagh said.

Data centre investment reached $5.1 billion in June 2021, with Hong Kong and China mainland experiencing the strongest growth, accounting for over 60% of the volume.

The region’s prime data centre markets of Hong Kong, Singapore, Tokyo and Sydney are expected to account for around 50% of the global data centre co-location market by 2025.

“APCF seeks durable income and capital appreciation from a balanced and diversified portfolio of real estate investments whose properties are located in or around a defined list of investment cities in Asia Pacific selected for their resilience,” Kavanagh added.

Residential buildings
APCF also bought three multi-family residential buildings in Osaka, comprising 342 units in total.

“Multi-family residences represent an attractive investment opportunity in Japan as a resilient and defensive asset class,” Kavanagh said.

Household growth in Japan has outpaced the marginal decline in total population and is underpinning the demand for the mass market multi-family rental market, she noted.

“The Japan market is seeing an upward trend in rental residential properties, which our fund is able to take advantage of,” Kavangah said.

“Osaka’s economy, while less diversified than Tokyo’s, is manufacturing-based, a sector which has benefitted from increased global demand as well as the move to bring supply chains onshore following the Tohoku earthquake.” AsiaFinancial