Keppel Ltd has signed a memorandum of understanding with Mitsui Fudosan to jointly explore data centre development and investment opportunities in Japan and Southeast Asia.

The MoU brings together Keppel’s strong customer relationships with global cloud service providers and internet enterprises as well as expertise in developing and operating innovative and sustainable data centres, with Mitsui Fudosan’s strong track record in sourcing land and delivering turnkey solutions for the real estate market in Japan.

In addition, Keppel Data Centre Fund II (KDCF II), which is the second data centre private fund managed by Keppel, has in place a framework agreement with Mitsui Fudosan for the proposed forward purchase of a data centre, that is currently under development, in Western Tokyo. When completed, this will mark Keppel’s first data centre project in Japan.

Under the framework agreement, KDCF II will work exclusively with Mitsui Fudosan on the acquisition of the freehold purpose-built data centre, that has a planned gross floor area of more than 300,000 square feet (27,871 square metres).

The data centre is expected to be “ready for service” in 2027, and it is envisaged that Mitsui Fudosan will develop the core and shell of the data centre, while KDCF II will undertake the fit-out works by leveraging the operating and technical know-how of Keppel’s operating division, Keppel Data Centre & Networks (Keppel DC&N). KDCF II will also appoint Keppel DC&N as the facility manager of the data centre in Western Tokyo, once the construction is completed.

Christina Tan, chief executive officer, fund management, and chief investment officer of Keppel, says: “As one of the leading digital hubs in Asia, Japan’s data centre market continues to grow at an exponential pace. The Western Tokyo data centre presents a rare opportunity for Keppel to enter the Japan data centre market. Under the MOU, Keppel expects to work even more closely with Mitsui Fudosan, an established property developer in Japan, to further penetrate the Japan market, in order to deliver attractive risk adjusted returns to our investors.”

Japan is one of the largest and fastest growing data centre markets in the Asia-Pacific region. According to the latest research by Statista, revenue in the Japan public cloud market is projected to reach US$21 billion in 2024 and expected to grow at a compound annual growth rate of 12% from 2024 to 2028, resulting in a revenue of US$34 billion by 2028. This growth in cloud adoption will ensure a resilient demand for more data centres, including demand from the hyperscale data centre market, Keppel says.  

Japan has been one of the key markets for Keppel with its first asset acquired in 2004. To date, Keppel has invested in over 30 deals in Japan across various asset classes from residential, commercial real estate to logistics and education.