GDS purchases Beijing data centre campus for US$110m

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Chinese data centre developer GDS has acquired a data centre campus in Beijing for RMB 785.1m (US$109.9m) at a time when permits to build and operate such assets are in short supply.

The campus is made up of three data centres, one of which is under development, in Beijing’s Shunyi district, just 8km from the buyer’s existing Beijing 5 asset, GDS said.

It will offer 19,700 sq.m. of capacity once the third asset is completed, representing a total enterprise value of RMB 2.49bn (US$348.4m).

Data centre demand in Bejing remains firm, however most operators are considering satellite cities amid limited supply in China’s tier 1 cities, according to CBRE.

“Data centre capacity in Beijing is scarce,” said GDS chairman and CEO William Huang.

“The addition of this data centre campus adds substantially to our presence in China’s largest tier 1 data centre market and expands our relationship with two key hyperscale customers.”

Completed in 2017, the first centre, Beijing 10, offers about 6,400 sq.m. in net floor area and is 95% occupied.

The Beijing 11 centre, completed in 2018, has 6,500 sq.m. of NFA and is more than 60% utilised.

Beijing 12 is under construction and will offer 6,800 sq.m. of NFA when it is completed in the first half of 2020.

The campus has secured commitments and pre-commitments for about 67% of the entire campus from a leading short video streaming company, an existing hyperscale customer and one of China’s largest internet companies.

GDS expects the campus to reach full occupancy no later than mid-2022.

Beijing is one of China’s key data centre markets, although rising power costs and strict regulations from city authorities around building and operating data centres has pushed operators towards to nearby cities such as Tianjin and Hebei.

According to CBRE, there was no upcoming supply in the city scheduled over the next two years, as of Q1 2019.

The deal comes after GDS and Singaporean sovereign wealth fund GIC partnered up to build and operate hyperscale data centers outside of Tier 1 cities in China in August this year.

At the time, the GDS CEO said: “While our core business remains strongly focused on providing outsourced data center solutions in Tier 1 markets, where the entry barrier is high and where we believe our core value lies, the partnership with GIC enables us to supplement our primary offerings and cost effectively fulfil the broader requirements of strategic customers outside of Tier 1 markets, while maintaining our equity returns.”

Last month, Hong Kong-based Gaw Capital Partners teamed up with data centre specialist Centrin Data to establish and manage a portfolio of hyper-scale data centres in China.

Its first asset was located in Kunshan, Jiangsu, which is 40km away from Shanghai city centre.