As the AI revolution picks up speed, Hong Kong’s data center market is changing fast. Repurposed industrial properties are becoming essential for handling hyperscale and AI needs. The Asia Pacific region faces a projected power shortfall of 15-25GW by 2028, even as data center supply is set to double over the next three years. Valuations are under upward pressure, with yields compressing to 4.0-7.0% for top-tier facilities in key spots. This opens doors for adaptive reuse, as shown in BonVision’s recent valuation of an AI-ready data center conversion, which strengthens Hong Kong’s position in global digital networks.
Current Market Landscape: Hyperscale Expansion and AI-Driven Demand
Asia Pacific’s data center capacity topped 12.2GW in 2024, with another 14.4GW in progress or planned. AI workloads, which use two to five times more power than standard ones, are driving this. In Hong Kong, the hyperscale segment stands at USD 2.08 billion in 2025, expected to hit USD 6.33 billion by 2031 with a CAGR of 20.35%. Installed IT load is projected to grow from 1,212MW to 2,058MW. Areas like Kwai Chung and Tsuen Wan attract hyperscalers, with some buildings offering up to 50MW for liquid-cooled AI. APAC transaction volumes reached US$21.6 billion in 2024, almost ten times higher than in 2023, with Hong Kong taking about 8%. The region has around 60 data centers and all major cloud providers, but supply shortages continue amid demand from fintech, e-commerce, and digital shifts.
Addressing Power Constraints and Supply Shortages
Power remains the main hurdle, with AI sites requireover 1GW campuses and advanced cooling. In Hong Kong, limited 132kV power-feeder slots and three-year connection queues cut growth forecasts by approximately 3.2%. Turning old warehouses into data centers helps with land shortages, using existing setups for 18-50MW loads approved by utilities such as CLP. Government support, such as Northern Metropolis incentives and industrial building redevelopment, forters steady income via long-term leases and dense operations.
Enhancing Valuations Through AI-Ready Conversions
Valuations mainly use the income capitalization method, based on stable net operating income at 4.0-7.0% yields for Tier-III+ assets, adjusted for power density and location. AI features can boost property values through better rents and occupancy, as colocation yields tighten with more institutional money. BonVision’s recent assessment of an AI-ready site in Hong Kong used income capitalization to derive the gross development value and highlight conversion benefits and market trends. These changes fit APAC patterns, where modern assets attract consistent growth and strong funding.Harbin Data Center (Harbin, Heilongjiang Province, China), WZMH Architects. (n.d.). China Mobile Data Centre, Hohhot and Harbin, China.
Exploring Alternative Uses and Emerging Hubs
In addition to main hyperscale centers, edge facilities (500kW-5MW) provide opportunities for low-latency AI in IoT and autonomous technology, projected to grow by 25% annually in APAC. Mixed developments incorporating renewables, such as green-hydrogen deals or SMR sites, offer ideas for Hong Kong’s Northern Metropolis, possibly including AI R&D hubs. Flexible zoning builds lively systems, meeting global capacity demands, which are expected to more than double by 2030.
Navigating Valuation Challenges
High construction costs, often reaching tens of billions for 1GW facilities, alongside power delays and environmental risks like flood zones, pose hurdles. Valuation pitfalls include over-reliance on hyperscale leases and rapid technological obsolescence, with emerging market yields at 9.5-10.5% reflecting these uncertainties. Public-private partnerships, ESG mandates for renewables, and thorough feasibility studies encompassing power grid reviews are essential for balanced appraisals.
How BonVision Supports Your Strategy
BonVision delivers expert valuations, market analysis, and strategic advisory for AI data centers in Hong Kong. Our data-driven insights on power feasibility, yield trends, and demand dynamics empower clients to optimize portfolios, mitigate risks, and capitalize on the APAC surge. Contact us for tailored solutions.