Warehouse provider turned data centre giant Goodman Group launches $4bn fund, more to come for Greg Goodman’s AI vision

The industrial property group is firmly established in data centres. But the extent of Greg Goodman’s ambition is only just being realised.

Goodman Tsuen Wan West in Hong Kong.

Billionaire Greg Goodman is stepping up the expansion of his company’s data centre empire, putting his faith in the artificial intelligence boom to launch a $4.1bn fund focused on the Hong Kong market.

Goodman Group has been among the biggest sharemarket winners from the surge in demand for cloud computing and AI-related services, and analysts are backing these themes to continue to underwrite Mr Goodman’s pivot to data centres from warehouses.

“We’re a big believer in the digitalisation of the world and effectively we think that is the opportunity for the world over the next ten years,” Mr Goodman said on Friday.

As demand rises for data centres, the multi-billion dollar projects nonetheless face constraints getting built.

“Supply is getting more constrained, and that comes down to capital. When we look at data centres globally now, their cost is averaging out at $1bn per data centre,” he said.

The Goodman chief executive cited the extensive infrastructure and planning they require, combined with high construction costs, as limiting supply. “It is really about being really good at the infrastructure, having the money and basically being able to service the customer,” he said.

Billionaire Greg Goodman. Picture: John Feder/The Australian.

Goodman is both setting up new funds to seed developments, and aiming to secure fresh sites – often by converting existing industrial holdings – to give it the edge in the battle for data centre supremacy.

Its business differs from technology companies, which often build to their own needs, and more opportunistic private equity players who are hoping to trade projects before the heat comes out of the boom.

Goodman is instead aiming to replicate the business model that turbocharged its growth into a global logistics giant. It will set up funds for global pension investors to participate in the data centres it is building.

“Our job is to build world class infrastructure, make sure we’ve got the money to do it, and make sure we can do it consistently over the next ten years,” Mr Goodman said. “So this is not a short term game, not some sort of opportunistic game. This is long term infrastructure that’s essential for the companies, for the countries, and for governments.”

Some data centre funds have been hit with drawdowns as doubts creep in over AI valuations and as Chinese groups challenge Nvidia’s AI chip dominance. Investors are not the only ones having second thoughts; Amazon and Microsoft have slowed the roll out of new facilities.

Mr Goodman said that having the funding in place could make all the difference when developing data centres – which doesn’t require betting on the right model or customer.

“It’s a really good sector to be in if you’ve got the money, if you have the infrastructure, and you have the ability to deliver; it’s a long term game,” he said.

Goodman now has funds backing data centres in Japan and Hong Kong, and Australia is on the cards, too.

“I think the market will see more of Goodman doing it where we’ve got our industrial partnerships around the world,” the CEO said. “The amount of capital you require for this industry is large, so you do need to partner it.”

Goodman raised $4bn in equity in February to restock its balance sheet and give it the capacity to get major builds underway. It is now bringing in partners as those advance.

Artist's impression of a Goodman Group data centre.

The new Goodman Hong Kong Data Centre Partnership will be a model for future enterprises. The initial portfolio includes six Hong Kong assets that span about 2.3 million sq ft, including two data centres under construction.

Goodman holds a 20 per cent cornerstone stake, alongside leading institutional and sovereign wealth funds including PGGM, APG, and the Canada Pension Plan Investment Board, as well as CBRE Investment Management’s Indirect Private Real Estate Strategies and a Middle East investor.

The centres are occupied by major global technology customers and Goodman is well positioned as its holdings account for about 30 per cent of Hong Kong’s data centre market by power capacity.

The partnership follows the Goodman Japan Data Centre Venture in 2023, which will reach $US1.1bn in assets by the end of this year.

“Demand for data centres in Hong Kong and Tokyo continues to grow with limited supply alternatives. The strength of the Goodman platform is enabled by our land in prime locations, secured power, an experienced team, and access to capital,” Goodman head of Asia, Paul McGarry, said.

“Combined, these factors position us well to continue delivering to the scale and quality that meets the needs of our customers. With a future development power bank of over 1GW across these major cities, we are confident in our ability to deliver the modern, high-performance infrastructure essential to Asia’s digital economy,” Mr McGarry said.

Originally published as Warehouse provider turned data centre giant Goodman Group launches $4bn fund, more to come for Greg Goodman’s AI vision