William Huang, chairman and chief executive of GDS Holdings
Just one week after announcing a $587 million capital raise to fund its expansion beyond mainland China, Shanghai-based data centre developer and operator GDS has struck a partnership with Gaw Capital to build a 40-megawatt (MW) data centre campus in Greater Tokyo, marking GDS’ entry into the Japanese market.
The project is set to be redeveloped from two adjacent properties in western Tokyo’s Fuchu City acquired by a fund managed by Hong Kong-based Gaw Capital in 2022 and 2021, with the campus expected to be Fuchu City’s largest data centre facility by IT load when operations commence by the end of 2026, according to the partners.
“Our successful cooperation with Gaw Capital Partners signifies that our international business now fully covers the three most important markets in the Asia-Pacific region outside of mainland China: Hong Kong, Southeast Asia region centered on SIJORI (Singapore-Johor-Riau Islands), and Japan,” William Huang, GDS’ chairman and CEO said in a release on Tuesday. “Given the booming demand for AI, we believe that the international business of GDS will achieve rapid growth.”
The collaboration between Gaw Capital and GDS comes amid a surge of institutional investments in Japan’s digital infrastructure market, with the country on track to exceed 3 gigawatts (GW) of operational capacity within the next five years on the back of a 1.7GW development pipeline, according to Cushman & Wakefield’s APAC Data Centre Update published in February.
Western Tokyo Hub
Located within the Fuchu Intelligent Park data centre cluster 30 kilometres (19 miles) west of central Tokyo, the campus will take over a 10,969 square metre site currently occupied by a pair of buildings which a Gaw Capital vehicle had acquired for undisclosed amounts in 2022 and 2021.
Kenneth Gaw, president and managing principal, Gaw Capital Partners
“Today marks a momentous step towards a digital future in Fuchu,” said Kenneth Gaw, president and managing principal of Gaw Capital. “This partnership combines Gaw Capital’s global real estate experience with GDS’s proven track record in operating high-performance data centres, signifying our shared commitment to delivering cutting-edge data solutions that meet and exceed the needs of businesses in the region.”
At the time that it first announced the western Tokyo project in 2022, Gaw indicated that the carrier-neutral tier III facility would accommodate 4,040 racks with a total power capacity of 50MW. At the time of that acquisition, construction of the project’s first phase was already said to be underway. The latest release did not provide updated details regarding the project timeline or capacity.
International Expansion
GDS, which is listed on both the Nasdaq and Hong Kong exchanges, announced last week that it had signed agreements to raise $587 million in series A convertible preferred shares from investors including Chinese private equity major Hillhouse and its real assets arm Rava Partners, as well as Hong Kong-based private equity firm Boyu Capital and US investment managers Princeville Capital and Tekne Capital, to fund the expansion of its international business.
That international unit, branded as DigitaLand, will be led by former GDS chief operating officer Jamie Khoo, who was named chief executive of the international business at the same time that the funding round was announced.
Also known as GDS International, DigitalLand was founded in 2022 in Singapore and has 330MW of data centre capacity in service and under construction and 340MW lined up for future development in Hong Kong, Singapore, Malaysia and Indonesia.
“Japan is one of the three core data center markets in the Asia-Pacific region, with its market size ranked among the top ten globally. GDS’s entry into Japan further strengthens our international presence and underscores our commitment to enabling digital transformation,” said Huang.
GDS’s existing revenue-generating assets outside of mainland China consist of an 18.2MW facility in Hong Kong and the first phase of a 158.7MW campus in the southern Malaysian state of Johor, both of which are self-developed and owned. The company also provides services for third-party data centres in Singapore, including assets owned by Singaporean data centre provider STT GDC.
GDS’ major investors include STT GDC, which is the company’s largest shareholder with a 31.6 percent stake as of December, as well as Hillhouse, Singapore sovereign fund GIC and insurance giant Ping An.
Top Sector, Target Location
Gaw Capital, which identified both data centres as a sector and Japan as a location among primary targets for its $3 billion Gateway Real Estate Fund VII, joins a growing club of global investors pursuing data centre projects in the Land of the Rising Sun, as increasing cloud adoption, data consumption and investment in artificial intelligence boost demand for digital infrastructure.
Last week, Singapore-based Princeton Digital Group and Australian builder Lendlease completed construction of the 48MW first phase of a 96MW data centre campus in Saitama prefecture, north of Tokyo, with Warburg Pincus-backed PDG investing $1 billion across the life of the project.
That milestone came the same month that a joint venture between Mitsubishi Corporation and US-based Digital Realty opened a 34MW data centre in Chiba prefecture, growing the partnership’s portfolio to three facilities in Greater Tokyo and seven overall in Japan.
Also in March, Singapore’s Keppel Ltd signed a tentative deal with Mitsui Fudosan to explore data centre development and investment opportunities in Japan and Southeast Asia, including a proposed forward purchase of an under-development facility in western Tokyo that will mark Temasek-backed Keppel’s first data centre project in Japan.
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