Data center clinic: Tackling Hong Kong's space constraints

Map of Tseung Kwan O Industrial Estate (Credit: Google Map)One of the biggest pain points for Hong Kong is scarcity of land. This ailment is commonly felt by many cities in Asia like Tokyo and Singapore.

With limited land supply, Hong Kong's data center service industry has found it hard to expand to meet with the increasing market demand.

In the last 12 months or so, two Chinese heavyweights launched two data centers in Hong Kong: the AliCloud data center (a collaboration with Towngas Telecom) in November 2015, and the opening of the China Unicom (Hong Kong) Global Center in August.

"The limited availability of land makes it difficult for the industry to expand with the increasing market demand," said Steven So, VP, Data Center Business, NTT Com Asia. "The need for premium data centers with best-in-class infrastructure continues to outgrows supply."

Earlier in March, US-based Synergy Research Group released some unflattering statistics. Based on its Q4 2015 data, Hong Kong accounted for less than 4% of major cloud and internet data center sites, after mainland China (7%) and Japan (6%) and Singapore (4%).

The results were unsettling, as the Hong Kong Government has been marketing the city as a data center hub of the region.

Brownfield land search

In March, the Innovation and Technology Bureau (ITB) announced the Government was to arrange the sale of two greenfield sites for high-tier data center development in the Tseung Kwan O Industrial Estate (TKOIE) area.

With the limited supply of greenfield sites, and that TKOIE is fast reaching saturation, what can Hong Kong data center operators do to ensure there is a steady stream of supply of data center space?

"For medium term growth, PCCW Solutions has built new data center capacities from brownfield sites by retrofitting industrial buildings with good results," said Brian Groen, SVP, Digital & Cloud Solutions, PCCW Solutions.

As SUNeVision's Executive Director and CEO Peter Yan observed, there have been increased activities and greater interest shown in brownfield sites for data center development.

Brownfield site redevelopment is closely tied in with OGCIO's earlier industrial building concessionary scheme, which encourages the conversion of old existing industrial buildings and the modification of industrial lot leases for data center use. First launched in 2012 and expired in March 2016, the Government has extended the scheme without specifying a closing date.

Generally welcomed as a positive move, Yan remarked, "Hong Kong has a good supply of industrial buildings that can be converted to data centers. Further facilitation by the Government in the approval process would further strengthen Hong Kong's position as a data center hub."

Tackle with tech

Other than searching for brownfield sites, data center providers rely on technology to expand their capacities internally.

"We are looking to expand by designing and building smarter, high density and more cost-efficient data centers, alongside our global services like network, managed security and cloud that seek to grow with our customers," said So.

SUNeVision also bets on high density data center deployment, by lifting the power density of its existing data centers.

As for enterprises, Fergus Wong, business development manager of Schneider Electric Hong Kong noted a growing trend of using co-location services to facilitate a hybrid cloud environment. "This is an effective way to deal with the land shortage problem."