PETALING JAYA: The hyperscale data centre (DC) development in Elmina Business Park, Selangor announced by Sime Darby Property Bhd (SDP) is expected to lift the profile and land prices in the area moving forward, said RHB Research.
In a statement, the research firm said Sime Darby Property will be the first developer in Malaysia to own a hyperscale DC and rental income from this facility should add to its pool of recurring incomes over the long term.
“We also do not rule out the possibility that more DCs will be established in the City of Elmina or Sime DarbyProperty’s other industrial parks,” it added.
Yesterday, SDP announced that it has entered into an agreement with Pearl Computing Malaysia, a wholly-owned subsidiary of Raiden APAC, to build and lease a hyperscale DC on a 19.83 hectares site at Elmina Business Park to Raiden APAC.
It said the DC will be leased for 20 years upon completion, with the renewal option of a further five plus five years, and the total rent payable to Sime Darby Property over the first 20 years is estimated at RM2 billion.
The research firm stated that SDP will likely tender out the construction contract for this DC and also needs to provide the necessary infrastructure, including a fibre network and perhaps also additional power supply to the site.
“The cost of land for the group should be cheap, but upfront costs to invest in this DC will be sizeable.
“In our view, SDP’s balance sheet is sturdy enough to enable it to undertake the financial commitment, since its net gearing is only at 0.24 times presently,” it said.
Based on discussions with some industry players, RHB Research said the expected rental yield from a DC may be around 8%, which means annual rental revenue for Sime Darby Property may amount to RM8 million.
“We do not discount the possibility that more DCs may be built in other industrial parks currently developed by Sime Darby Property, including in Bandar Bukit Raja, Serenia Industrial Park, Hamilton Nilai City and Bandar Universiti Pagoh,” it said.
Given its strategic exposure, RHB Research said SDP is well positioned to ride on the wave of DCs being set up in Malaysia.
“To fund a portfolio of DC facilities in the future, we think management may replicate the Industrial Development Fund model used for its joint venture project with LOGOS in Bandar Bukit Raja,” it said.
