Hong Kong-based real estate company ESR Cayman has made its first data center purchase in Hong Kong - picking up a building to convert into a 40MW data center.

The building in Kwai Chung, part of Hong Kong's New Territories, will have a value of around $675 million on completion. Details of the building, and the purchase price, were not revealed.

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ESR Cayman comes home

“This is a major strategic move for ESR as it represents our first acquisition in Hong Kong and further establishes our data center franchise,” said Jeffrey Shen and Stuart Gibson, ESR co-founders and co-CEOs. “Hong Kong is an important data center market in the APAC region, with its low electricity costs, limited climate risks, and established network capability. It is also one of the world’s top financial centers as well as the home to ESR’s headquarters. Entering the Hong Kong market is a key expansion strategy as we continue to build our integrated digital and logistics supply chain infrastructure platform to help fuel the new economy in APAC.”

ESR Cayman claims to be the largest logistics real estate company in APAC, but this is its first purchase in its home turf of Hong Kong. The group, with backing from investors such as Warburg Pincus, has plans to build a data center ecosystem across the region - buying a data center in Japan in April, which it plans to develop into a three-facility campus. It now has approvals for around 200MW of APAC data center capacity.

Kwai Chung contains Hong Kong's container port and is also a major data center cluster. ESR Cayman will work with investors and operators to turn the building into a 40MW data center.

“ESR’s foray into Hong Kong via this asset acquisition is a rare brownfield opportunity in a major data center cluster. Set in one of the ideal locations for data centers and coupled with its meaningful scale, we are confident that the converted asset will be well-positioned to provide customers with scalable and flexible solutions while creating long-term values for investors,” said Josh Daitch, ESR group head of fund management & capital, and Rui Hua Chang, ESR Group MD for capital markets & investor relations.

Data centers are a new move for ESR Cayman, which previously focused on logistics and "new economy" properties.