Data centre market tightens as demand outpaces new supply

Most existing facilities remain below the rack density needed for AI workloads.

Hong Kong’s data centre market is facing growing pressure from AI demand, with most existing facilities unable to support the higher rack density required for AI workloads, according to CBRE.

The property consultancy said most of the city’s data centres are designed for 5 kilowatts (KW) to 15KW per rack, below the 40-KW capacity or more typically needed for AI, whilst vacancy is expected to tighten over the next 12 to 18 months as leasing demand stays firm.

The city’s outlook comes as Asia Pacific data centre investment reached a record $90.93b (US$11.6b) in 2025, CBRE said in its 2026 Asia Pacific Data Centre Trends & Outlook Report. 

The consultancy added that growth across the region is increasingly shifting toward power-advantaged markets such as Malaysia, Australia, and India.

In Hong Kong, leasing demand continues to be driven by hyperscale cloud service providers, mainland Chinese technology and e-commerce firms, and financial institutions.

Activity from multinational banks and international financial institutions is also picking up, supported by expansion requirements and a growing focus on operational resilience.

Hong Kong’s active data centre capacity stood at 687MW as of the first quarter, with another 653MW in upcoming capacity.

CBRE said demand remains split between occupiers securing space early in newly completed high-specification facilities and those taking short-term capacity in older assets, also noting that the trend has widened the gap between newer and legacy stock.

Newer facilities typically report vacancy of 10% to 15%, supported by pre-leasing activity, whilst older and less efficient assets continue to record higher vacancy due to weaker power efficiency, higher operating costs, and reduced competitiveness.

Near-term development remains concentrated in established clusters including Kwai Chung and Tseung Kwan O. Longer-term supply is expected to come from the Sandy Ridge Data Facility Cluster, which CBRE said will provide around 250,000 square meters of gross floor area from 2029.