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Building a data centre in Hong Kong may not be the best idea after all

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November 2, 2012

Hong Kong is potentially losing the opportunity at winning large U.S. companies to build their data centre in that region for a number of good reasons. Looking for a suitable location to build their data infrastructure in Asia, several restrictions make alternative locations more attractive, while at the same time a lot more complex.

Speaking at the MIG Data Centre Summit 2012 in Hong Kong two days ago, deputy government CIO Joey Lam argued that demand for data centres in Hong Kong will grow in the Special Administrative Region (SAR) by an annual compounded growth rate of over 9 percent in the period from 2009 to 2015.

Some observers in the room say the estimate could be a bit too optimistic, however. Nevertheless, Lam said the government was doing its best to attract investment here by offering a range of support services for interested parties and by expanding the amount of data centre space available for U.S. companies as well as businesses from all over the world.

“We have reserved two hectares of land for high tier data centre development with the first available for open bidding next year,” Lam explained.

“In a small area like Hong Kong, greenfield sites for data centre utilization are difficult to come by but we have a large stock of industrial buildings supported by good telecoms and power infrastructure and suitable for data centre development.”

Real estate firm Cushman and Wakefield seemed to think these policies were working, rating Hong Kong the safest data centre location in Asia for the past two years in its Datacentre Risk Index.

But not everybody agrees with that. Amod Jayawant, regional director for property advisor CBRE, told attendees that U.S. clients are often not impressed by what’s on offer in Hong Kong, and for good reasons.

“For U.S. companies, the major stumbling block is they can't get over the concept of a building where different floors are owned by different companies,” he said.

“If they're looking to do a greenfield build, they have to handle several restrictions, like they can't release the land or on-sell the space. Actually, they can't even buy the land outright but just lease it from the Hong Kong government, even though still they're spending millions."

Jayawant added that despite the government’s insistence on pushing old factories as data centre locations, there are some issues, and some of them are more complex than what's seen at first glance.

"Not all industrial buildings can handle data centres. Either they can't handle the floor loading or the slab to slab height is too low or, and this is what we've been encountering the most-- there simply isn't enough power in the building to power the data centre," he said.

"The largest single element of operating expenditures in any data centre is always the same: power. And it doesn't matter in which city or country you operate, data centres always consume a lot of power," he added.

To be sure, Singapore has often challenged Hong Kong as the pre-eminent tech hub of Asia and is still going out of its way to attract multi-nationals by agressively promoting the region, according to Deloitte partner Gavin Pathross.

“The Hong Kong government is trying very hard but Singapore and Malaysia are giving away important tax breaks to bring in large U.S. firms, among them Google and Amazon, and Singapore did the same to bring in the big banks a few years ago,” he argued.

“I'm not sure that Hong Kong can continue building data centres in such an agressive fashion, and I'm sure hoping that U.S. firms will come, but China’s emerging position as a global outsourcing hub will potentially drive demand for data centres and Hong Kong has an opportunity to play this market.”

But they will both face tough competition from Taiwan, according to Jayawant. “In Taiwan, the power is stable, politically it's also similar to Hong Kong, and there are a lot of submarine cables going in and out. Also, the government is willing to work with foreign companies there," he said.

In other IT news

Hurricane Sandy, one of the most powerful tropical storms to ever hit the eastearn U.S. seaboard has taken out at least one critical part of a significant data center.

Internap, which operates a global content delivery network and data centers to make it work, has reportedly emailed its customers the following warning earlier today about one of its server colo facilities in New York City: "Please be advised that Internap's LGA-11 facility is experiencing significant flooding in the sub-basement of the 75 Broad Street building as a result of Hurricane Sandy."

"The flooding has submerged and destroyed the site's diesel pumps and is preventing diesel fuel from being pumped up to the generators on the mezzanine level," read the email.

Internap added that the available fuel reserves on the mezzanine level are estimated to support customer loads for approximately 5 to 7 hours maximum.

Once that fuel supply has been exhausted the generator will no longer be able to sustain operation and critical customer power loads will be lost.

The email was sent before midnight on October 30, meaning that the diesel fuel has already run out. Internap shut down servers for clients for whom it was contractually obliged to do so.

The email was sent before midnight on October 30, meaning that the diesel fuel has already run out. Internap shut down servers for clients for whom it was contractually obliged to do so.

The email suggests others should log on ASAP to do it themselves. Little else is known about Hurricane Sandy's effect on the technology world. Twitterer Skeeve Stevens has reported a friend who works at Microsoft reports submarine cables have gone dark.

Amazon Web Services Service Help Dashboard reported all is well at the time of writing, while Sun Hosting and Rackspace also reported it's business as usual after earlier detailing how they were prepared for the storm.

Source: The 2012 MIG Data Centre Summit in Hong Kong.

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