The rapid evolution of artificial intelligence (AI) is set to significantly impact data centre real estate investment trusts (REITs), with data centre capacity projected to nearly triple to 219GW by 2030. This surge is largely driven by AI workloads, which are expected to account for 71% of this capacity, according to a sector update by UOB Kay Hian on Singapore’s data centre REITs.
The anticipated listings of AI giants OpenAI and Anthropic are likely to draw further attention to data centre REITs. Notably, NTTDCR is projected to offer the highest dividend per unit (DPU) yield of 8.6% by 2027, whilst KDCREIT, with its strong Singapore-centric portfolio, is well-supported by its sponsor, Keppel. DCREIT is also expected to see a substantial 17% growth in DPU in 2027.
AI’s transition from basic chatbots to complex, autonomous systems has increased the demand for data centre capacity. These agentic AI systems, capable of executing multi-step tasks, require continuous operation, thereby increasing the need for robust data centres near network and power hubs.
Despite the projected US$5t investment in global data centres, supply constraints due to power availability and planning restrictions are anticipated. AI inference workloads are expected to surpass training demands by 2027, reinforcing the need for strategically located data centre infrastructure.
The sector remains attractive, with a recommendation to maintain an overweight position on data centre REITs, particularly those in supply-constrained markets like Singapore. NTTDCR and KDCREIT are highlighted as high-quality holdings, with NTTDCR’s low leverage and KDCREIT’s strong rental growth prospects. DCREIT’s improved portfolio occupancy and potential capital recycling through asset divestment further bolster its outlook.
