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Singapore Data Center REITs: Riding the Wave of AI-Driven Growth

Singapore Data Center REITs at a Glance

Investors are focusing on data center REITs that combine rapid price appreciation with attractive dividend yields amid evolving digital infrastructure needs. Key players ranked by year-to-date (YTD) price change and dividend yield (TTM) include:

Demand Acceleration: AI Workloads and Leasing Trends

Global demand for data center capacity is forecasted to grow at a compound annual growth rate (CAGR) of 22% from 2023 to 2030, reaching an annual requirement of 219 gigawatts by 2030. Within this surge, AI-ready data centers are anticipated to outpace overall growth, expanding at a remarkable CAGR of 33%. By 2030, AI-optimized facilities could constitute 70% of total data center capacity, potentially resulting in significant supply shortages. Concurrently, hyperscale operators—led by AWS, Google Cloud, and Meta Platforms—are increasingly favoring leasing over building, shifting the lease-to-build ratio from an even 50:50 split to a dominant 70:30. This shift underscores a strategic change that benefits data center REITs, reinforcing stable long-term demand.

Robust Macroeconomic and Technological Environment

Singapore's strategic investments in digital infrastructure, including plans to double subsea cable capacity by 2030 alongside low vacancy rates (~2%), position the city-state as a vital Asia-Pacific digital hub. Generative AI's rising compute and power requirements markedly increase demand for hyperscale data centers. This demand, coupled with hyperscale tenants' growing preference for leasing (now 70%), supports stable growth for data center REITs.

Supply Constraints and Financing Environment

Global supply remains tight, especially in Singapore and North America, where vacancy rates are near historic lows. Market optimism over future rate cuts is expected to reduce financing costs for REITs, enhancing dividend sustainability and balance sheet flexibility. These factors form strong catalysts for valuation recovery and growth.

Spotlight on Leading REITs

Among Singapore data center REITs, CapitaLand Ascendas REIT (A17U) leads with a strong year-to-date (YTD) price gain of 13.85% and an attractive dividend yield of 7.86% (TTM). The REIT’s diversified portfolio and recent financial results highlight steady rental income growth backed by high occupancy rates and strong demand from hyperscale tenants, offering solid confidence for investors.

$Keppel DC Reit(AJBU.SI)$  follows closely with a 12.01% YTD increase and a 3.97% dividend yield. It benefits from strategic acquisitions and a high-quality tenant base focused on hyperscale infrastructure, supporting a positive growth outlook.

Other REITs such as $DigiCore Reit USD(DCRU.SI)$   and $Mapletree Ind Tr(ME8U.SI)$   have seen modest price declines this year but maintain healthy dividend yields of 5.96% and 6.51% respectively, reflecting their resilience amid market fluctuations.

$NTT DC REIT USD(NTDU.SI)$   , which recently debuted on the Singapore Exchange, was marketed with an attractive indicative distribution yield of around 7.5% for the financial year 9 months ending March 2026. Since listing, the share price has retreated slightly below the IPO price, reflecting typical post-IPO volatility. The REIT's portfolio includes six data centers located primarily in the US, Austria, and Singapore, with a high occupancy rate above 90%. As it builds its presence mainly in Japan and other key markets, investors are closely watching NTT DC REIT's performance and dividend sustainability going forward.

Outlook: Positioned for Sustained Growth

Analysts forecast continued robust performance from data center REITs as AI-driven workloads fuel demand. Stable tenant profiles, strategic regional positioning, and a constrained supply backdrop collectively suggest the sector offers compelling risk-adjusted returns for income-seeking and growth-oriented investors.

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