Data Centre S-Reits Report Growth in Latest Results
The rise of artificial intelligence (AI) has emerged as a significant theme for investors in recent years, positioning data centre (DC) assets as likely beneficiaries as the adoption of such technology gains momentum. Property consultancy JLL highlighted in its 2025 Global Data Center Outlook that global DC capacity is projected to grow at 15% annually between 2023 and 2027, though this increase may still fall short of meeting growing demand.
The consultancy noted that the DC sector is on the brink of “enormous, transformative growth” driven by the rapid advancement of AI. The convergence of rising power requirements and DC growth presents a “generational investment opportunity.”
Among the actively traded real estate investment trusts in Singapore (S-Reits), five have exposure to DCs, including pure-play trusts such as Keppel DC Reit and Digital Core Reit.
Keppel DC Reit reported last month that its net property income rose by 6.3% year-on-year to S$260.3 million for FY2024. Its distribution per unit (DPU) also increased during the same period by 0.7% year-on-year to S$0.09451. This rise was propelled by contributions from acquisitions, as well as strong rental reversions and escalations. The Reit’s manager indicated that market trends, including generative AI and strong demand for DCs, helped achieve robust rental reversion of about 39% in FY2024. Keppel DC Reit continues to focus on the hyperscale market, continually identifying and redeploying resources into accretive opportunities.
Meanwhile, Digital Core Reit reported last week that its same-store cash net property income rose 0.7% year-on-year in FY2024, while distributable income rose by 10.9% to US$46 million. The Reit owns a diversified portfolio of 10 facilities valued at US$1.6 billion, concentrated in core DC markets across the United States, Canada, Germany, and Japan. The manager noted that cloud and digital transformation fundamentals remained healthy, and AI has dramatically accelerated global DC demand.
Elsewhere, Mapletree Industrial Trust (MIT) in January reported a 1.5% year-on-year increase in DPU for its third quarter, which ended on Dec 31, 2024. Its gross revenue and net property income also saw a boost—by 2% and 2.6%, respectively, over the same period. More than half of the Reit’s S$9.2 billion in assets under management are DCs. It attributed its Q3 growth to higher contributions from its Osaka DC and a newly acquired mixed-use facility in Tokyo, as well as new leases and renewals from its Singapore and North American portfolios.
Other S-Reits with exposure to DCs include CapitaLand Ascendas Reit (Clar) and CapitaLand India Trust. The latter has four DCs under development, with revenue contribution expected to commence from Q2 2025.
CBRE noted in its US Real Estate Market Outlook 2025 that demand for DC capacity in North America is expected to outpace supply despite record construction activity. This demand growth is fueled by digital services, cloud computing, AI, and 5G deployment.
While some AI and DC counters experienced a sell-off last month over reports concerning Chinese AI startup DeepSeek potentially building models with comparable performance at lower costs, recent developments could still be favorable for the sector.
UOB Kay Hian analyst Jonathan Koh maintained an “overweight” recommendation on the Reit sector last month, with “buy” calls for Digital Core Reit, Keppel DC Reit, MIT, and Clar. He observed that DeepSeek demonstrated the rapid pace of innovation in AI. Both US and Chinese AI players could leverage these techniques to reduce the cost of training new AI models, potentially spurring widespread technology adoption.
“Demand for DC for AI training and AI inference would continue to rise,” he added, suggesting a positive trajectory for data centres as essential components of the evolving technological landscape.
