Data center refers to a space that accommodates facilities supporting computer systems and other associated components, such as telecommunications and storage systems. Generally, it contains backup power sources, data communication connections, environmental controls (such as air-conditioners and fire extinguishers) as well as various safety facilities. A large-scale data center can consume as much electricity as an industrial sector of a small town.
Currently, setting up a data center in Hong Kong does not require government approval nor does it require any applications for licences. The requirements are similar to other general commercial organizations. In other words, the sole requirement to set up a data center is to apply for business registration. The major difficulties in setting up a data center in Hong Kong are site selection, hardware procurement and power supply issues. If the client intends to operate by way of renting an information room of an operating company that has an existing data center in Hong Kong instead of setting up a data center from scratch, the operating company would have to bear all the main responsibilities regarding compliance. However, clients should conduct due diligence on these aspects or consider relevant compliance issues when selecting an operating company.
Site selection
In general, data center can be set up by ways of: –
- redevelopment or conversion of existing industrial buildings;
- set up on undeveloped land sold by the government; of
- purchase or rent sites / floor area in the open market.
1. Redevelopment or conversion of existing industrial buildings
There are numerous existing industrial buildings in Hong Kong. Owing to the high ceilings, flexible floor layouts, high floor loading capacity as well as comparatively cheaper rents than ordinary commercial buildings, industrial buildings are one of the most popular spots to set up data centers.
However, nowadays, government leases of industrial buildings generally contain restrictions such as land use. Company plans to set up a data center in one of these industrial buildings, should inspect the leases to see whether it permits the setting up of data centers in the relevant industrial building. Also, the landlord can make an application to the Lands Department to either amend the lease or to apply for waivers regarding user restrictions on the land and buildings.
2. Purchase or rent commercial sites/ floor area
An alternative method is to purchase or rent commercial buildings and commercial properties in the open market to set up data centers. Nevertheless, it is still necessary to determine whether there are land use restrictions stipulated in the concerned government leases on setting up data centers in the respective industrial building.
3. Set up on undeveloped land sold by the government
Under Hong Kong’s town planning regime, land is zoned for different purposes under the statutory outline zoning plans. Data centers may be operated in areas zoned as “commercial”, “industrial”, “Other Specified Uses” (“OU”) annotated business”, “OU” annotated “Industrial Estates” and “OU” annotated “Mixed Use” in the outline zoning plans.
One of the permitted uses under the above listed zones is “Information Technology and Telecommunications Industries” (IT&T industries), which includes data center use. For areas zoned as “Comprehensive Development Area” permission from the Town Planning Board is required for data center use.
Author: Artemis Szeto, Partner
Please feel free to contact us at enquiry@hksunlawyers.com for further enquiries.
