Data centre industrial sector to get big boost from Facebook’s $1.4 billion infrastructure investment

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Facebook announced on Thursday (Sep 6) that it will be investing $1.4 billion to build its first data centre in Asia in Singapore. The data centre to be built in the industrial district of Jurong East, will be a 11-storey structure, spanning 170,000 square meters.

Facebook said that its new data centre here will form part of its growing presence in Singapore and Southeast Asia and will support hundreds of jobs after its construction.

“We selected Singapore for a number of reasons, including robust infrastructure and access to fiber, a talented local workforce, and a great set of community partners, including the Singapore Economic Development Board and the Jurong Town Corporation, both of which have helped us move this project forward,” the tech company said, adding that the city-state’s established policies foster a “business-friendly environment”.

Facebook’s massive infrastructure investment in Singapore is expected to be located close to Google’s upcoming third data centre in Singapore.

data centre
Image credit: Google

Google announced in early August that due to the rapid growth in users and usage in the region it was building its third data centre in Singapore. The announcement said: “Located in Jurong West, just down the road from our first two buildings (Singapore’s not a very large place), and looking something like the rendering below, this expansion will bring our long-term investment in Singapore data centers to USD $850 million.”

Adding: “The multi-story facility will be one of the most efficient and environmentally friendly sites in Asia, in line with our global approach. It will feature the latest machine learning technology to reduce energy use. And we will use recycled water, diverting 100 percent of the data center’s waste away from landfill.”

Google said that with the building of its third data centre, it was “looking forward to growing our small team at the data centers here, as well as expanding our ties with the local community.”

A bottom is in sight for industrial property market

The Facebook data centre, like Google’s, is expected to be powered by “100 percent renewable energy”. Facebook will use liquid cooling technology to minimize water and power consumption, and the building’s facade will be made out of perforated material to facilitate better airflow.

The Facebook announcement comes after a research report by Colliers International said that Singapore continued to be a key location for data centre deployment in Asia.

The Colliers report said that abundant data centres will be completed in Singapore in the second half of 2018.

“Singapore continued to be a key location for the deployment of data centres in Asia. We estimate at least four data centre properties of over 1 million sqft in gross floor area, are scheduled to obtain their Temporary Occupation Permit (TOP) in H2 2018, including:

  • Development by AWAN Data Centre at Tuas Avenue 4.
  • Development by Global Switch Property at Woodlands Height. This six storey single user building is its second data centre in Singapore and has building functions that exceed Tier III operational performance.
  • Mapletree Sunview 1, a built-to-suit data centre located at 12 Sunview Drive within Jurong Data Centre Park. Completed by Mapletree Industrial Trust in July 2018 with an initial lease term of more than 10 years.
  • STT Defu 2, a five storey development under ST Telemedia Global Data Centres. This is its sixth data centre in Singapore.

Google has started construction of its third data centre in Singapore in August 2018. This brings Google’s total investment in data centres in Singapore to SGD1,160 (USD850) million.”

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The research by Colliers said that continued restructuring of the industrial landscape was in tandem with the Smart Nation initiative, and was moving towards the next generation of the industrial revolution.

“First mooted in Singapore by the Committee of Future Economy, the Industry 4.0 initiatives are increasingly evident as JTC announced more facilities to consolidate and create industrial clusters. Under JTC, the first high rise hub, TimMac@Kranji, is expected to provide flexible modular spaces for metal, machinery and timber companies while the Innovation Cybersecurity Ecosystem @ Block71 is planned to become the first incubation hub to groom cyber security start ups.

Developers are also rejuvenating their properties in anticipation of the demands from newer industries. Soilbuild is developing Solaris @ Kallang 171, an integrated high tech industrial property at Kallang Way, to house RF360 while AIMS AMP Capital Industrial REIT has recently announced its asset enhancement initiatives for NorthTech industrial building in Woodlands as part of its strategy to build higher quality portfolio.”

Colliers further noted that there was a growing institutional interest in the industrial property market sector for acquiring more industrial spaces: “Based on records from JTC as of 16 August 2018, a total of 455 caveats were lodged in H1 2018, down slightly 1.5% HOH. However, total strata sales volume jumped 17.6% YOY, suggesting a rising interest in the strata market.

We also notice a growing institutional interest in acquiring more industrial spaces, especially in niche sectors such as data centres, hi-spec facilities and modern ramp-up logistics buildings during H1 2018.

According to JTC, prices of overall industrial spaces stabilised in Q2 2018 after 12 consecutive quarters of declines, led by a positive uptick in centrally located properties and those with more than 60 years leasehold tenure. We project that capital values for prime industrial spaces with freehold or long land tenures will continue to rise on the back of rising demand amidst limited supply. Overall industrial capital values, however, should remain stable for the foreseeable future.”

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