Asia’s Digital Hub Experiences Unprecedented Colocation Expansion
Hong Kong’s position as a critical digital gateway for Asia-Pacific continues to strengthen, with the data center market demonstrating remarkable resilience and growth potential. Valued at $3.62 billion in 2025, the market is projected to surge to $5.81 billion by 2031, representing a compound annual growth rate of 8.20%. This expansion reflects the region’s strategic importance in supporting cloud computing, artificial intelligence workloads, and cross-border data exchange between mainland China and global markets.
The momentum isn’t merely speculative—it’s backed by substantial capital commitments and infrastructure development. With 54 operational colocation facilities currently serving the market and 13 additional facilities in various stages of development, Hong Kong is experiencing a construction renaissance that rivals major markets like Singapore and Tokyo. The concentration of activity in Tseung Kwan O, which accounts for approximately 41% of existing white floor space and over a quarter of upcoming supply, signals a strategic clustering effect that benefits operators through shared infrastructure investments and proximity to fiber networks.
Billion-Dollar Partnerships Reshape the Competitive Landscape
July 2025 marked a watershed moment when Goodman Group launched the Goodman Hong Kong Data Centre Partnership, a $2.7 billion investment vehicle backed by institutional heavyweights including PGGM, APG, and CPP Investments. Managing six facilities with a combined IT capacity of 180 megawatts—including two under-construction projects—this partnership exemplifies the scale of capital now flowing into Hong Kong’s digital infrastructure. Such mega-investments underscore investor confidence in the region’s long-term viability despite geopolitical considerations and competition from neighboring markets.
The vendor ecosystem supporting this expansion is equally robust. Global IT infrastructure providers including Arista Networks, Dell Technologies, Fujitsu, and IBM maintain strong presences, ensuring access to cutting-edge compute and networking technologies. Meanwhile, support infrastructure specialists like Schneider Electric, Vertiv, and Legrand deliver the power distribution, cooling, and management systems that enable hyperscale operations.
Operational Economics and Market Entry Dynamics
Industrial electricity pricing remains a critical consideration for operators, with costs ranging between $0.17 and $0.19 per kilowatt-hour as of Q1 2025. While not the cheapest in the region, Hong Kong’s stable dual-utility model—anchored by CLP Power and Hongkong Electric Company—provides the reliability essential for mission-critical operations. This infrastructure stability, combined with the territory’s robust legal framework and network connectivity, continues to attract both established players and new entrants.
The competitive landscape is expanding rapidly. Alongside incumbent operators such as SUNeVision Holdings, AirTrunk, Digital Realty, Equinix, and Global Switch, new market participants including Chinachem Group, ESR, TPG Angelo Gordon, and Mapletree Investments are deploying substantial capital. This influx of competition is driving innovation in facility design, with most new developments adhering to Tier III standards that balance reliability with capital efficiency.
Construction partnerships are proving equally dynamic. Local specialists like BYME Engineering have secured major projects, including Digital Realty’s HKG10 Phase 3 expansion, demonstrating that regional expertise complements global operator requirements. Engineering firms such as Arup, AtkinsRealis, and Cundall are bringing advanced design capabilities to projects that must navigate Hong Kong’s unique challenges—limited land availability, stringent building codes, and demanding sustainability expectations.
Strategic Implications for Enterprise Decision-Makers
For organizations evaluating colocation strategies in Asia-Pacific, Hong Kong’s market evolution presents compelling opportunities. The territory’s retail and wholesale colocation segments both show strong growth trajectories, offering flexibility for enterprises at different stages of digital transformation. The concentration of hyperscale operators also creates ecosystem effects—proximity to cloud on-ramps, interconnection fabrics, and managed service providers that extend beyond basic rack-and-power offerings.
