CapitaLand Investment: ‘Looking closely’ at data centers

Top of the CapitaLand building in Singapore’s central business district (CBD); taken September 2018.Top of the CapitaLand building in Singapore’s central business district (CBD); taken September 2018.

CapitaLand Investment said it was “looking closely” at the data center segment, pointing to increasing demand amid an information technology proliferation.

The real estate investment manager (REIM) was responding to questions from shareholders at its annual general meeting (AGM) in late April, according to minutes filed to SGX Wednesday.

CLI said the two parts of the data center business — owning/developing the property and operating data centers — were both in its scope of business, and the REIM could also consider converting some of its business park or logistics assets to data centers.

But it added: “There were possible difficulties in certain countries where there are foreign ownership restrictions. In these situations, CLI would have to find strategic partners to work with in order to scale its data centre business meaningfully.”

Nursing and retirement homes

When asked if CLI would consider nursing home or retirement village investments, the REIM said only two markets in the Asia Pacific region — Australia and Japan —  had “well-grounded” markets for those assets.

“While there would be a big demand for retirement homes, it might not necessarily be a sustainable and commercially viable investable asset class, as it might be difficult to drive rental growth from retirees,” the REIM said. “It needed to be studied further. CLI’s lodging team had started to work with a European partner to sign management contracts in Asia to manage some facilities, to learn more, particularly on how to grow this asset class sustainably in big markets, considering issues like insurance and affordability for retirees.”

When asked about targeted geographies for investments, CLI said around 80 percent of its business iw in Asia and the current plan was to maintain this percentage.

“Singapore is CLI’s home base and it would continue to look for opportunities in Singapore,” the REIM said. “Some markets in the Asia-Pacific, such as Japan, Korea, India and Australia, might present opportunities and CLI would also allocate capital to these geographies for suitable opportunities.”

For the private fund business, CLI said its immediate priority was to focus on Asia-Pacific markets, such as China.

“While CLI’s ambition was to be global, CLI aimed to develop a good track record in the Asia-Pacific in the next few years with a focus on ensuring consistent good returns for its limited partners,” the minutes said. “CLI had a good base to steadily grow its private equity real estate and alternative assets business throughout Asia-Pacific due to its deep understanding of the markets, enabling it to identify interesting opportunities.”