Hong Kong's Data Center Boom: Scaling Up to Meet Asia's Digital Demand

Hong Kong's data center market is on the brink of a transformative expansion, fueled by surging demand for cloud services, AI infrastructure, and 5G connectivity. By 2028, the city's white-floor IT load capacity is projected to hit 92 MW, supported by over 2.35 million square feet of new data center space—a 50% increase from current levels. This growth, driven by hyperscalers and cloud providers, is creating a rare opportunity for investors to capitalize on scalable infrastructure in one of Asia's most critical digital hubs.

Current Capacity and Future Growth: The Numbers Behind the Boom

Hong Kong currently operates 54 data centers, mostly Tier III facilities, with a total IT load capacity of 1.42 GW (1,420 MW) as of 2025. The upcoming 13 new projects—spread across Tseung Kwan O, Kwai Chung, and other key nodes—will add over 400 MW of power capacity by 2026 alone. By 2028, the market's compound annual growth rate (CAGR) is expected to hit 8.18%, pushing total capacity to 2.1 GW, per industry analyses.

The Tseung Kwan O cluster, already accounting for 34% of Hong Kong's IT load capacity, is ground zero for this expansion. SUNeVision Holdings, the region's largest operator, currently commands over 130 MW there, but competitors like Equinix, Digital Realty, and NTT are aggressively expanding. Meanwhile, new entrants such as GDS Services and Mapletree Investments are targeting underserved niches, such as small-to-medium enterprise (SME) colocation.

Key Drivers: Why Hong Kong Dominates

1. Strategic Location: Hong Kong's role as a submarine cable nexus—four new cables will be operational by 2025—ensures ultra-low latency connectivity to markets from Tokyo to Singapore.
2. Government Backing: Initiatives like the Digital 21 Strategy and dedicated regulatory support for data center development have slashed bureaucratic hurdles.
3. Sustainability Push: Operators are adopting renewable energy partnerships (e.g., AirTrunk's biogas deal with CLP Power) and advanced cooling systems, aligning with ESG mandates.

Pricing Dynamics: Wholesale vs. Retail

The market is bifurcated into wholesale (for hyperscalers) and retail (for SMEs). Wholesale pricing, which accounts for $1.8 billion in projected revenue by 2029, is rising sharply due to cloud providers' insatiable demand. Meanwhile, retail pricing remains stable but fragmented, with add-ons like managed services driving margins.

Investment Opportunities: Where to Play

1. Tier IV Facilities: These high-reliability data centers (99.995% uptime) now command 47% of the market, as critical industries like finance and healthcare demand redundancy.
2. Tseung Kwan O Exposure: Invest in operators with prime land or partnerships in this district, such as SUNeVision or NTT.
3. Brownfield Conversions: Projects repurposing existing buildings into data centers—e.g., warehouses in Kwai Chung—offer lower land costs and faster deployment.
4. ESG-Compliant Players: Firms with renewable energy agreements or carbon-neutral commitments will attract institutional capital.

Risks to Monitor

• Land Scarcity: Hong Kong's constrained real estate could push costs higher unless brownfield projects scale.
• Overbuilding: A glut of supply could depress pricing if demand growth slows.
• Geopolitical Risks: Tensions in the region could disrupt cross-border data flows.

Conclusion: A Long-Term Bet on Digital Infrastructure

Hong Kong's data center market is a winner's game for investors willing to focus on scalability and reliability. With cloud spending in Asia-Pacific set to hit $160 billion annually by 2028 (per Gartner), the demand for white-floor capacity is all but guaranteed.

For now, SUNeVision Holdings and Equinix are the clear leaders, but GDS Services and Mapletree's entry-level offerings could offer asymmetric returns. Pair this with ****, and the case for investing in this sector becomes compelling.

In a world where data is the new oil, Hong Kong's infrastructure is the refinery—and investors who bet on it now will reap the rewards for years to come.

Investment Takeaway: Prioritize companies with prime land in Tseung Kwan O, Tier IV certification, and ESG credentials. Monitor wholesale pricing trends and submarine cable investments as key growth indicators.