Local IT, Chinese firms boost Hong Kong’s data centre market amidst high vacancy

Hong Kong’s political and environmental stability and competitive prices continue to attract occupiers.

Hong Kong’s data centre supply has surpassed demand, leading to a 30% vacancy rate due to 195 MW of new 2023 supply amidst softer leasing conditions, CBRE reported.

Meanwhile, net absorption improved as local IT service providers, mainland Chinese companies, and multinational hyperscalers capitalized on the high vacancy rate to secure major transactions over the past year.

Hong Kong’s political and environmental stability, along with its role as a regional commercial hub, continues to draw data centre occupiers with new supply and competitive prices. 

However, geopolitical issues and the slowing Chinese economy impact Hong Kong’s data centre market absorption. 

CBRE expects the current supply wave to continue until mid-2025 before tapering off, leading to a better long-term supply-and-demand balance. Colocation pricing in the retail and enterprise sectors remains subdued amidst softer vacancy rates.

In addition, CBRE expects developers and operators to retrofit existing industrial buildings for supply after 2026 due to limited new land and power supply.