The global data centre market is poised for strong expansion, driven by rising demand for cloud services, the Internet of Things, edge computing and AI. Yet, demand is expected to outpace supply. Market intelligence provider DC Byte forecasts global data centre demand to grow at a compound annual rate of 19.4% from 2024 to 2028, while supply (both self-built and colocation) is projected to increase by 18.3% over the same period.
KDC REIT is expected to mirror this growth trajectory. It operates 24 data centres across 10 countries — including Singapore, Europe, China, Australia and Japan — with an occupancy rate above 96%.
While demand continues to rise globally, supply is increasingly limited due to power and land availability, especially in Europe. However, Maybank’s TMT analyst Hussaini Saifee sees stronger upside in Asean, underpinned by a multi-year growth cycle. The growth will be driven by the increasing interest from cloud service providers, developers, and investors, amid accelerating digital adoption, geopolitical shifts, and the rise of data sovereignty regulations in Southeast Asia.
“We forecast a 4.9% CAGR in distribution per unit (DPU) from 2024 to 2027, driven by rental escalations and M&A activity,” writes analyst Guha in his report dated July 17.
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He also highlights that KDC REIT benefits from the backing of its sponsor, Keppel DC Investment Holdings, a wholly owned unit of Keppel Corp. Keppel brings over a decade of experience in designing, building and managing data centres and related digital infrastructure, including telecom networks, submarine cables and power systems.
The group currently manages 650 megawatts of gross IT capacity and plans to nearly double that to 1.2 gigawatts (GW). It is also exploring next-generation concepts such as 1GW nearshore net-zero data centres. These initiatives provide KDC REIT with growth opportunities, which is further enabled by its low gearing of 30.2% and an estimated 4.3% yield, notes Guha.
As at 11.53am, shares in KDC REIT are trading at $2.28 flat.
