Hong Kong Data Center Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

The Hong Kong Data Center Market size is expected to grow from USD 2.67 billion in 2023 to USD 5.28 billion by 2028, at a CAGR of 14.60% during the forecast period (2023-2028).

Hong Kong is one of the critical data center locations in the Asia-Pacific region due to the low tax rates and electricity costs, rich network capability, and suitable climate conditions. These factors are mainly attracting investments from across the world to support the growth of data centers in the country. For instance, in July 2020, China Mobile acquired an industrial site in Fo Tan for data center development for HKD 5.6 billion. The accommodation value of HKD 5,967 per sq ft is the highest on record for an industrial site.

Key Highlights

• Nearly all the central cloud and hosting service providers globally have established a presence in Hong Kong. According to Datacenters.com, there are presently 22 service providers and 43 data centers in Hong Kong. This comprises 42 colocation facilities, 29 cloud nodes, 13 Internet exchanges (IX), and ten disaster recovery and business continuity (DRBC) sites.
• Hong Kong is a principal financial and international trading and logistics hub and is home to several regional offices and headquarters of global corporations. This generates a strong demand for secure data center facilities and services. Its proximity to China's Mainland is also a core strength, thus stressing the need for data centers in the region.
• In particular, hyper-scale and international digital media content and public cloud service providers such as Amazon Web Services (AWS), Facebook, Google, and Alibaba Cloud have been fundamental in pushing demand for data center services, significantly enhancing their uptake of data center capacity in Asia and particularly in Hong Kong over the past few years, by building massive-scale platforms.
• In July 2021, The Hong Kong-based telecom services provider PCCW agreed to sell its data center business to a New York-listed infrastructure REIT DigitalBridge Group for USD 750 million in a bid to focus on its main telecom business. PCCW operates facilities at nine data center locations in Hong Kong, Mainland China, and Malaysia. However, DigitalBridge only acquired the Powerbase HK (Hong Kong) and DC Malaysia (Malaysia) subsidiaries from PCCW.
• The government of Hong Kong is adopting a multi-pronged approach in facilitating the development and application of the 5G network and plans to launch 5G services very soon. The low latency rate of 5G technology would likely drive the demand for cloud storage, real-time data accessing and streaming. Data centers would likely not only expand but also need upgrades amid this network transformation.
• However, with the onset of the COVID-19 pandemic, different supply chains across many industries are affected, including data center infrastructure. All significant components of a data center are built off-site, delivered, and then installed, indicating vulnerable breakage points for the market's supply chain.
• Despite the ongoing COVID-19 outbreak and geopolitical uncertainties, the Hong Kong data center market activity has remained stable. In one of the most significant leasing transactions this year, the US-based data center, REIT Digital Realty, announced in July 2020 that it agreed to lease a newly established high computational data center at 11 Kin Chueng Street in Kwai Chung, the vendor's second data center facility.

Hong Kong Data Center Market Trends

Tier 3 is the largest Tier Type

• Tier 4 data centers lead Hong Kong's data center market based on tier capacity. Their IT load capacity is expected to increase from 330.3 MW in 2022 to 1092.3 MW by 2029 at a CAGR of 18.6%. A growing number of IT businesses and smart devices and increased use of varying digital applications have led to consumers opting for tier 4 data centers.
• Tier 4 data centers offer high bandwidth, lower downtime, disaster recovery, low latency, and better connectivity. Clients, such as content providers that cannot afford a longer duration of downtime, prefer to use tier 4 data centers.
• The increased use of streaming content, online gaming, and smart devices led to increased consumption in the country. Increased consumption of data and better services have led companies to opt for tier 4 data centers. However, growing smart city initiatives are expected to trigger the growth of Tier 3 data centers as well, with a CAGR of 5.9%.

Hong Kong Data Center Industry Overview

The Hong Kong Data Center Market is fragmented, with the top five companies occupying 38.63%. The major players in this market are China Mobile International Ltd., Global Switch Holdings Limited, Hostdime, NTT Ltd. and Zenlayer Inc (sorted alphabetically).

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