I see two challenges. One is the political climate and current administration, which has been negative toward Chinese ownership of any tech- or intellectual property-related deals; it started even when Obama was president, as the government canceled its longstanding contract with Waldorf Astoria New York after Anbang’s acquisition of it, out of fear of eavesdropping. I can only imagine what the critics will say about potential risks in access to data. Second is consolidation within the tech sector has ramped up. With so many mergers and acquisitions, it’s likely there will be a surplus in facilities as companies combine their resources.
What are the market prospects for data centers as a niche asset class in 2018?
We are a Chinese fund that had passed on a couple LP opportunities in early 2017. We knew they were a good investment, but were not comfortable with GP in both deals. Assuming we find a GP we are comfortable with, are data centers still a strong investment opportunity in 2018 or has the market been oversaturated?
Data centers will continue to be a growth industry. Most surveys I have seen show growth to be in the 8 percent to 10 percent range over the next three years. The issue is really the optimization of the data centers with power and storage. New technology usage with data centers, including fuel cells and solar, I predict will be the forward-looking strategy of many data users so invest with this in mind. Good luck on the GP search. Remember, it's like a marriage. Given that you are in China, think of it as a long-distance marriage. In other words, you better really trust your partner and really have strong agreements in place.