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Webinar Q & A | Data Centres in Mainland China: Four Points to Process in 2022

Shaun Brodie • 23/05/2022


During our recent webinar on What’s Next for Data Centres Across Mainland China? our Cushman & Wakefield data centre subject matter experts were joined by Anthea Lee, Chief Executive Officer, Keppel DC REIT Management and Andrew Sylvester, Head of Sales, International & Greater China, Schneider Electric who discussed Mainland China's data centre market as covered in our latest report  Data Centres in Mainland China: Four Points to Process in 2022.   

Here, we answer some questions that came through from the audience that we weren’t able to get through during the webinar: 



By Shaun Brodie | Head of Content, Greater China Research 

Is there an over-supply in China now? 

According to a study by the Ministry of Industry and Information Technology (MIIT), there is an oversupply of data processing facilities in parts of China's central, western and northeast regions, while demand for data centres in major densely populated coastal cities continues to grow. This has led to the "Transporting Data from Eastern Regions to Western Regions for Storage and Calculation" strategic project becoming an important development to support China's overall computing infrastructure. The project is a way to channel the high demand for computing power from the east to the west in an orderly manner, allowing data elements to flow across the region. 

In the future, demand for data centres will continue to grow due to the rise of the short-form video, gaming industry, webcasting, and China's ongoing plans for IoT projects, smart cities and artificial intelligence. 

Can you elaborate a bit more on the Shanghai Data Trading Centre? 

The Shanghai Data Trading Centre is also known as the Shanghai Data Exchange. The Shanghai Data Exchange was established on 25 November 2021 in Pudong New Area, Shanghai. It is an important functional institution supported by relevant departments and agencies of the Shanghai Municipal People's Government to promote the circulation of data elements, release digital dividends and facilitate the development of the digital economy. The establishment of the Shanghai Data Exchange focuses on a series of innovative arrangements by centring on key common challenges such as difficulties in identification, pricing, mutual trust, access and supervision. It will advance the digital transformation of Shanghai and is expected to become a "Shanghai model" for the development of data element markets across the country. 

On the day of the establishment of the Shanghai Data Exchange, about 100 data products were accepted for listing and completed listing, covering eight categories such as finance, transportation and communications, and some of the first transactions were concluded. 


By Shaun Brodie | Head of Content, Greater China Research 

What new incentives is the government considering to promote data centres across Mainland China?   

As China's data centres are still in urgent need of being upgraded to reach an across-the-board high level of technology, computing power, energy efficiency and security, the government has formulated the Three-Year Action Plan for New Data Centre Development (2021-2023), as well as some related policies and measures like the 14th Five-Year Plan for the Development of Digital Economy and the 14th Five-Year Plan for the Development of the Information and Communications Industry. In the future, the construction and application of data centres are expected to benefit from the government's support in technology, talent and funding, to develop high-density, energy-efficient and low-carbon data centre clusters and to optimise the layout of data centres in the eastern and western regions.  


By Terry Chen | Associate Director, Valuation & Advisory Services, Greater China 

Property sales are referenced by size sqm – is this the norm in data centre negotiations?   

No. Megawatt (MW), kilowatt (kW) and number of racks are the more commonly used metrics in data centre transactions and valuations, as the asset’s income is usually based on power capacity. 

Is there any insight on cap rates?  

Transaction information around stabilised data centres is currently limited in China’s property investment market and it is relatively difficult to source evidence on cap rates through public avenues. Based on a survey that was sent out by our valuation team to several domestic and foreign data centre investors, the cap rate for data centres in tier-one cities and satellite cities would be around 7.5% – 8.5% and 9.5% –12.0% for other cities. 


There is reference to “Beijing Energy-Saving Monitoring Services Platform”, can you expand on how this works and whether commercial real estate is also using this?  

By Shaun Brodie | Head of Content, Greater China Research 

In the "1+4+N" framework for Beijing's energy-saving monitoring system, "1" refers to the municipal-level integrated platform, "4" refers to the industrial, building, transportation and public use platform, and "N" refers to the district and county platforms. The main construction content for the integrated platform includes the design of the functional model and its application development, the construction of the online monitoring system, the data planning scheme and the data integration scheme of the integrated platform, and the interface design. Its aim is to achieve resource sharing and data interconnection and interoperability with related energy information systems, to provide a comprehensive analysis of energy consumption and energy-saving information from the perspective of Beijing's entire energy sector, and to provide data support for macro-level decision-making and energy saving business supervision. 

In terms of data centres, the latest Work Plan for the Comprehensive Management of Inefficient Data Centres in Beijing mentions that online monitoring of energy and water consumption in large data centres will be strengthened, and it is planned that real-time monitoring data regarding energy consumption for large data centre enterprises will be continuously connected to the Beijing Energy Conservation Monitoring Service Platform. 

Moving forward, how important are the sustainability features of data centres in terms of an investor's liquidity?  

By Alton Wong | Head of Advisory Services & Co-Head of Sustainability Services, Greater China 

If a data centre asset or portfolio is not currently ‘green’ or sustainable enough, there will most definitely be challenges with liquidity in the future.  

In the short term we expect to see a premium price being paid for green projects. According to “Carbon Neutrality – Shifting to neutral to drive real estate sustainability in China”, a report jointly released by USGBC and Cushman & Wakefield, the average citywide rental for buildings with green certification in Shanghai is 11% higher than non-green buildings in Q1 2021.  

In the medium term as more and more green projects come to light, we are convinced that rather than a premium price being applied for green projects, there will be a depreciation in value for brown and energy-consuming projects that lack sustainable features.  

In the long term, we expect that projects that still lack ESG credentials may become unmarketable and illiquid. 

As a result of the changing landscapes both domestically and globally, it is always better to start building up ESG credentials for your data centre asset and portfolio as early as possible, if not now. 


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