The data center market in Asia Pacific is growing at the quickest rate in the globe.

Hong Kong's need for data centers is only increasing.

According to global property consultancy JLL, solid infrastructure, connectivity, and relative ease of doing business make Hong Kong, Singapore, Sydney, and Tokyo the preferred sites for data center investment in Asia Pacific. Data storage is in high demand, therefore companies are choosing to rent space rather than own it. Demand for shared or colocation data centers in Asia Pacific is expected to surpass U.S. revenue by 2020, rising to 40% of global revenue. freelancer

Due to rapid urban population development and widespread use of e-commerce, Asia Pacific is seeing an increase in the amount of data generated from various digital products and services. As the amount of data increases, companies are increasingly storing it in cloud storage. With public cloud spending in the Asia Pacific area estimated to reach $15 billion in 2018, major cloud providers such as Google, Amazon, Microsoft and Alibaba are competing to expand their cloud zones across the region.

JLL Asia Pacific's Director of Alternatives Bob Tan argues that as the cloud market grows, firms must swiftly develop infrastructure resources to stay up. Investing in the data center industry is becoming increasingly popular because it offers greater diversification and often delivers higher returns than traditional asset classes such as office or retail.

The Regional Director of Capital Markets for JLL in Hong Kong, Raymond Fung, stated: "North Asian integration has not lost steam because of Hong Kong. It's no secret that cloud service providers have increased the number of colocation facilities they offer.

The Chinese powerhouse 'BAT' has also been involved in this industry in China. The government has announced a 2.74-hectare property in Tseung Kwan O for bidding, which must be completed by the end of 2018. It has a 1 million-square-foot floor area and a maximum power output of 200 megawatts. This, we believe, will stir people's curiosity. We expect data center prices in Hong Kong to rise in the near future."

Recent JLL research shows that well-known investors and operators in Asia Pacific are exploring outside the usual hotspots in Singapore, Hong Kong, Sydney and Tokyo.

Mr. Tan goes on to say that "Cities with good infrastructure, connectivity, and a low cost of doing business have long attracted investors. A growing hotspot due to its enormous population as well as high Internet penetration and social media engagement is China, yet these cities are still major marketplaces. Users have been forced to shift to on-shore data centers due to privacy and cybersecurity legislation in these markets, which has fueled demand."

Colocation space is in high demand due to China's rapid rise in fintech, digital transformation, and reliance on big data analytics. China is already the world's fastest expanding data center industry. According to JLL, towns in China's Tier-2 region will see increased demand as land and power become more readily available, operating costs fall, and network and support infrastructure improves.

To be fair to data centers as an asset class, the research notes that they remain tough to get into due to a dearth of qualified personnel and experience in the field.

This is why so many investors are looking for a partner with experience that can meet their service level commitments while also troubleshooting and maintaining their equipment to keep energy expenses under control. Most investors have sought local partners through co-investments or joint ventures because acquiring these skillsets organically is challenging. Others have acquired local platforms to grow faster.

Other ways to increase awareness include custom data centers built for a specific company or the sale and leaseback of existing facilities. A new structure is designed to fulfill investors' needs in this case by working with the operator early on. Alternatively, investors can purchase data centers from operators or end users and hand over complete operational authority to those buyers.

According to Mr. Tan, data centers will remain a high priority for investors in the future. "Capital will continue to flow into emerging markets, which bodes well for the region's prospects. Due to their large and diverse markets, these locations have great consumer demand and strong growth possibilities."