IN PARTNERSHIP WITH

DATA C E N T R E M A R K E T T R E N D S

HONG KONG
ASIA’S CONNECTIVITY HUB
HONG KONG ASIA’S CONNECTIVITY HUB

EXECUTIVE
SUMMARY
The Hong Kong data centre market continues to push forward and displays a steady and consistent
trajectory. In 2021, this market was worth USD $1.4 billion and is projected to reach $2.5 billion in
2026. The projected five-year CAGR for 2021-2026 is 11%.

Like many leading markets around the world, Hong Kong has taken a significant turn to the hyperscale
side of the game. This is now a majority hyperscale colocation market and things will continue to shift in
that direction going forward.

The composition of the market, however, is slated to change over time as the political environment
emerging in Hong Kong begins to have an impact. A number of the leading hyperscale platforms are
based in the US and geopolitical tensions are inevitably going to influence decision-making, particularly
around sensitive areas like data sovereignty and privacy.

Hyperscale builds will continue and existing deployments are staying put. An entire ecosystem of
connectivity, traversing key landing points and exchanges, is not going to be easily lifted and shifted and
Hong Kong will retain its long-term strategic importance.

Even with several US-based hyperscalers looking for lower risk destinations, there is still going to be a
steady stream of hyperscale-grade demand for colocation capacity with Hong Kong expected to be
increasingly used as a springboard out of China for the next wave of Chinese tech companies. And we
have already started to see this with the top tier of China-based clouds like Alibaba and Tencent, followed
by the leading Chinese telcos. A second tier of public cloud, content and social media platforms, is set to
expand outside of China and Hong Kong will be the logical jumping off point.

Hong Kong remains a land constrained market, with unique strategic importance, that is also difficult for
hyperscale companies to self-build in. Data centre infrastructure is difficult to procure at the hyperscale
level and this ensures the long-term viability of the market even as the demand profile starts to transition.

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HONG KONG:
DATA CENTRE COLOCATION MARKET SIZE
in US$ millions
Hyperscale Retail Total

$3,000 Total 5-YR CAGR

Total $2,463 11.4%
$2,500 Total $2,257
Total $2,033
Total $1,103
$1,806 $1,035 5-YR CAGR
$2,000 Total $1,604 $965
Total 8.4%
Total $1,437 $883
$1,500 $1,267
$1,061 $810
$737 $1,361
$1,000 $667 $1,222
$582 $1,068 5-YR CAGR
$922
$500 $794 14.2%
$700
$600
$479
$0
2019 2020 2021 2022 2023 2024 2025 2026

55% 45% 53% 47% 51% 49% 50% 50% 49% 51% 47% 53% 46% 54% 45% 55%

0.3
25%
0.25

0.2 17%
19% 16% 16%
13% 14%
0.15 11%
13% 12% 13% 13%
15% 11%
0.1
9%
10% 10% 9% 9%
0.05
7% 6%
0
2019 2020 2021 2022 2023 2024 2025 2026

Source: Structure Research Hong Kong DCI Report, May 2021

Hyperscale segment to be the primary driver of growth for the Hong Kong
market over the next five years as cloud adoption continues to accelerate
across Asia Pacific

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HONG KONG MARKET:

KEY THEMES, TAKEAWAYS

STRATEGIC GEOGRAPHIC LOCATION WITHIN APAC REGION

Hong Kong is viewed as a top connectivity hub in the APAC region and as an aggregation point
for many major submarine cable systems that enable cloud providers and enterprises to access
and connect to a wide array of markets across the region. These submarine cable systems are
simply not easily lifted and shifted just because of geopolitical risks. That being said, there will
likely be more route diversity for new submarine cable systems that may look to decentralize
the historical aggregation points of Singapore and Hong Kong, which would create a more
resilient Internet infrastructure ecosystem that will help decrease bottlenecks and reliance on a
select few markets.

MARKET POSITIONING: CHINESE COMPANIES TO DRIVE DEMAND

Hong Kong is well positioned as a springboard for Chinese companies to expand internationally,
and initially attracted large data centre deployments from tier 1 Chinese hyperscalers (such as
Alibaba, Tencent and Huawei). This was quickly followed by Chinese telecom providers as they
saw Chinese hyperscale demand increase with China Mobile and China Unicom building their
own data centres in the Tseung Kwan O Industrial Estate area. Structure Research projects that
Hong Kong will be the one of the first international markets to benefit from the upcoming
wave of international expansions coming from a sizeable group of tier 2 and tier 3 cloud,
content, digital media and e-commerce companies that include Baidu, Bilibili, ByteDance, JD.com,
Kingsoft Cloud and Pinduoduo.

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HONG KONG CONNECTIVITY LANDSCAPE:

AGGREGATION HUB FOR INTERNATIONAL
SUBMARINE CABLE SYSTEMS

Hong Kong is an aggregation hub for internet traffic in the APAC region and its concentration of
connected submarine cables landing here still makes it a preferred location to both hyperscale and
enterprise companies.

The city’s central location in the APAC region results in lower connectivity costs and latency. It is also
strategically important as the intersection point of international cables and the domestic terrestrial cable
backbone connecting into China, serving as a conduit for data traffic between China and major ports.

Hong Kong serves as both a gateway into China, as well as a springboard for Chinese companies looking
to access international markets. A meaningful number of South East Asia companies still use Hong Kong
as a gateway to enter into China.

AGGREGATION POINT FOR

15 INTERNATIONAL SUBMARINE
COMMUNICATIONS CABLES NEW TERRITORIES
NORTH

KOWLOON
LANTAU ISLAND, CHINA WEST TSEUNG KWAN O
KOWLOON
APCN-2 BAY Asia Pacific Gateway (APG)
Asia-America Gateway (AAG) Cable System Asia Submarine-cable Express (ASE)
TSEUNG
FLAG Europe-Asia (FEA) KWAN O
EAC-C2C

HONG KONG
TONG FUK, CHINA ISLAND
CAPE D’AGUILAR
FLAG North Asia Loop/
REACH North Asia Loop Asia Africa Europe-1 (AAE-1)

DEEP WATER BAY CHUNG HOM KOK

SeaMeWe-3 Asia Direct Cable (ADC)

Tata TGN-Intra Asia (TGN-IA) EAC-C2C
Hainan to Hong Kong Express (H2HE)
Southeast Asia-Japan Cable (SJC)
Southeast Asia-Japan Cable 2 (SJC2)

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HONG KONG CRITICAL MW MARKET SIZE:

TOTAL DATA CENTRE COLOCATION MARKET
Contracted Capacity Current Built Out Capacity Max Built Out Capacity Total Capacity

900 828 828 828 828 828 828 828

800
686 828
700 828
820
796
600 641
683 607
500 564 572
511 523
468
400 444 461 463
411 417 404
362
300 354
317 321
290
200 241
100

0
2019 2020 2021 2022 2023 2024 2025 2026

Total Capacity
Total market colocation capacity assuming confirmed secured sites, land banks by colocation
providers, data centre sites under development/construction, and operationally live data centre
assets are fully built out.

Max Built Out Capacity

Maximum built out capacity assuming current operationally live data centre assets are fully built out.
Does not include capacity from confirmed secured sites, land banks by colocation providers and
data centre sites under development/construction.

Current Built Out Capacity

Live and operational data centre capacity or in some cases referred to as fitted out capacity.

Contracted Capacity
Represents sold or contracted data centre capacity. This also includes pre-commitments while a
given data centre asset is still under development

Hong Kong projected to hit 641MW of built out data centre capacity by 2026

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HONG KONG MARKET

VERTICAL DEMAND DISTRIBUTION
CONTRACTED CRITICAL MW CAPACITY (IN %)
Hyperscale Network / IT Service Providers Content & Digital Media
Financial Services Other Enterprise Government

100%
6% 6% 5% 5% 5% 4% 4% 4%

8% 8% 8% 8% 8% 8%
90% 8% 9%
5% 5% 5% 5% 6% 6%
4% 5%
80% 6% 6% 6% 6%
8% 7% 7%
7%

70%

30% 29% 28%

60% 31%
33% 32%
36% 34%

50%

40%

30%

47% 48% 49%

43% 45%
20% 40% 41%
37%

10%

0%
2019 2020 2021 2022 2023 2024 2025 2026

Global Switch is uniquely positioned to support the requirements of all the

key demand verticals from single rack deployments through to multi-megawatt
bespoke solutions for hyperscale platforms.

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HONG KONG MARKET:

TOTAL HYPERSCALE LEASED
DATA CENTRE CAPACITY
US VS. CHINA HYPERSCALERS

CN Hyperscalers
41.4% 2020

115 MW 58.5%

US Hyperscalers

2026
45.6%

54.4% 281.1 MW

The Hong Kong market is projected to see a 250% increase in hyperscale data
centre demand between 2020 to 2026, primarily driven by Chinese hyperscale
companies. Global Switch is uniquely positioned to capture this demand due
to its large scale data centre campus in Tseung Kwan O as well as established
global relationships with Chinese companies across its other markets.

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TOP 4 ASIA-PACIFIC MARKETS

BY CRITICAL MW CAPACITY

900

800

700

600

500

846
400

300
544

438
200 417

100

0
Tokyo Singapore Sydney Hong Kong

Hong Kong is a top 4 data centre market in the Asia Pacific region (excluding
Mainland China) in terms of currently built out critical MW capacity. Global
Switch has existing large scale data centres in Singapore and Sydney that allows
it to support multi-market requirements across the APAC region.

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HONG KONG:
HYPERSCALE CLOUD REGIONS

The world’s top hyperscale cloud platforms have already planted their flag in the Hong Kong market with
Chinese hyperscale providers likely to grow their footprint substantially in the near term. Oracle Cloud
is also likely to expand into Hong Kong in the near term as it looks to address enterprise demand in the
APAC region.

COMPANY CLOUD REGION AVAILABILITY ZONES ON RAMPS

- -

 -

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DATA CENTRE COLOCATION DEPLOYMENT

SIZES BREAKDOWN, REQUIREMENTS

FEATURES RETAIL WHOLESALE HYPERSC ALE

Typical Power < 240 kW 240 kW to 2MW 2 MW to 10 MW

Requirements and above

Typical Space 1 -40 racks/cabinets; cages
Requirements typically range between
500 - 5,000 sqft
Large private cage or
dedicated private suite or
data hall that can range
between 5,000 - 15,000
sqft
Entire data centre
floors to dedicated data
centre buildings that can
range between 15,000 -
120,000+ sqft

Infrastructure Shared Dedicated Dedicated

Environment

Customization Level of Low to Medium - standard Medium to High - ranges High - fully customisable
Data Centre Environment rack/cabinet configuration from pre-configured suites data floor or built-to-suit
with customisation options to fully customisable data powered shell
for cage deployments halls

Power Billing Model Flat rate Metered Metered

Carrier Density Medium to High Low to Medium Low to Medium

Technical Support Greater set of remote Limited set of remote Limited set of remote
hands and managed hands and managed hands and managed
services options services options services options

Redundancy Standard: N+1 Flexible: Flexible:

N, N+1, N+2, or 2N N, N+1, N+2, or 2N

Terms / Service Duration 1-3 year term 5-15 years 3-15 years triple new lease
(Triple net or full service)

Global Switch is positioned to address the entire spectrum of data

centre deployment models including retail, wholesale and hyperscale
colocation requirements.

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CORPORATE OFFICE
2nd Floor, Nova North
11 Bressenden Place
London SW1E 5BY
United Kingdom

+44 20 8054 9000

info@globalswitch.com

DATA CENTRES
Amsterdam Campus Frankfurt Campus Hong Kong
Amsterdam West / Amsterdam East Frankfurt North / Frankfurt South 18 Chun Yat Steet
Johan Huizingalaan 759 Eschborner Landstraße 110 Tseung Kwan O Industrial Estate
1066 VH Amsterdam 60489 Frankfurt am Main New Territories, Hong Kong
Netherlands Germany
+852 3955 1000
+31 20 6666 300 +49 69 74 22 70 saleshongkong@globalswitch.com
salesamsterdam@globalswitch.com salesfrankfurt@globalswitch.com

Singapore
London Campus Madrid Singapore Tai Seng
London East Calle Yécora, 4 2 Tai Seng Avenue
Global Switch House 28022 Madrid Singapore 534408
3 Nutmeg Lane Spain
London E14 2AX Singapore Woodlands
United Kingdom +34 91 312 06 00 7 Woodlands Height
salesmadrid@globalswitch.com Singapore 737858
London North
East India Dock House +65 6958 1800
240 East India Dock Road salessingapore@globalswitch.com
Paris Campus
London E14 9YY Paris East / Paris West
United Kingdom 7-9 rue Petit
92582 Clichy Cedex, France Sydney Campus*
+44 20 7473 9000 Sydney East / Sydney West
saleslondon@globalswitch.com +33 1 55 90 04 60 400 Harris Street
salesparis@globalswitch.com Ultimo, Sydney
NSW 2007 Australia

+61 2 9566 7000

salessydney@globalswitch.com
*Consolidated Group Entity

The information provided in this brochure is intended to be used for illustrative purposes
only and does not constitute part of any offer or offer to contract. Any information
herein contained is not warranted as accurate or complete. © Global Switch 2021.
ABOUT GLOBAL SWITCH

Global Switch is a leading owner, operator and developer of large-scale, carrier and cloud neutral,
multi-customer data centres in Europe and Asia-Pacific. Founded in 1998, Global Switch is one of the
highest credit rated data centre companies in the world with investment grade credit ratings from
Fitch, Moody’s and S&P Global Ratings.

Global Switch is a vital strategic partner for customers that require secure and resilient data centre
services with scalable capacity and a high-level customer service. The Company's focus is on highly
resilient, central, low latency, network dense locations in prime city centre locations and internet hubs
close to its customers on the edge of financial and business districts. Global Switch’s data centres
operate exclusively in the Tier I markets of Europe and Asia-Pacific to Tier III or higher and currently
total around 428,000 sq m (4,600,000 sq ft) of floor space and are occupied by a broad range of
customers, global and national, large and small including government organisations, financial institutions,
enterprises, global systems integrators, telecommunication carriers, cloud and managed service
providers and other hosting businesses.

ABOUT STRUCTURE RESEARCH

Structure Research is an independent research and consulting firm with a specific focus on the
hyperscale cloud and data centre segments within the Internet infrastructure market. We are devoted
to understanding, tracking and projecting the future of infrastructure service providers.

Our mission is to publish the best research and analysis, and supply the most comprehensive data
sets, about the Internet infrastructure services market. We provide the information and perspective
necessary to make accurate strategic decisions.

This report is developed by Global Switch in partnership with Structure Research and with Structure Research’s permission.
All rights reserved. The use of Structure Research’s content in this report does not indicate any endorsement by either Global
Switch or Structure Research of the other’s opinion, products and/or strategies.