Morgan Stanley Dean Witter is backing two new companies to acquire, let and manage so called 'carrier hotels' - highly specified and protected buildings for the co-location of telecoms and internet equipment.

The FT reported that Morgan Stanley Real Estate Funds (MSREF) is supporting the companies with initial funds of more than $1.25bn. MSREF will own more than 80 per cent of two new companies - Global Gateway (to serve Asia and the western US) and MetroNexus (to serve the rest of North America and Europe).

Although the US market may be approaching oversupply the FT says that 'some analysts believe demand for such properties in Europe could be even greater than in the US. That is partly because population density, concerns about consistent power supply, and the difficulty of getting planning permission for change of use or new buildings, make it more difficult to find suitable locations'.

Co-location centres in the UK are commanding large premiums - eight square feet in one carrier hotel will cost you £24,000 a year and that’s without a decent view!

Richard Byatt