What is the typical yield on dc compared to traditional industrial buildings? how long are lease contracts for operators typically for? What's the trend overall in the demand for data centres? how will this move over the next 5-10 years?



  • What is the typical yield on dc compared to traditional industrial buildings? how long are lease contracts for operators typically for? What's the trend overall in the demand for data centres? how will this move over the next 5-10 years?



  • The market range is about the 3.5-4 % yield, which is higher than traditional grade A offices in Hong Kong. And may continue to rise to 4% this year. Rents in most DCs have already gone up 5-10 percent.

    The lease period for data centres ranges from eight to 10 years or longer, which will likely translate into stable recurring income for operators. > We believe the stable streams of income makes data centres attractive investments.

    Few exciting trends yet to come

    Remote office solutions and cloud computing
    The coronavirus outbreak has forced world’s largest work-from-home experiment, triggering the acceleration of digitalization and automation of international banks and MNCs. Corporates, with a higher proportion of staff working from home, will likely increase the use of tools such as Microsoft MyAnalytics that collect data for tracking the efficiency and wellbeing of staff working from home.

    Online retail and e-commerce
    Consumer demand is increasingly shifting towards online shopping, and retailers should invest in online shopping platforms, enhancing omnichannel distribution strategies, as well as tools for data collection to analyse shopping patterns

    Green and sustainable data centre comes to the fore
    Data centres are energy intensive and providing all that power can be bad for the environment In response, data centre operators such as Equinix 17 has adopted renewables centric practices by sourcing 90 of their electricity sustainably, and they are on a committed path to achieve 100 clean and renewable energy Many data centre operators are increasingly abiding by the UN 2030 sustainability agenda 18 and Environmental, Social, and Governance ( principles, where profitability and sustainability are no longer perceived as a competing interest

    Sometimes it’s good to supplement expert advice with your own research as well. Recently I did an episode with Denzity on how you can do real estate research like a pro. You can check it out here: https://youtu.be/ZHzeYX_6sjk


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