On the Singapore Exchange, and based on the AI value chain, data centre REITs such as Keppel DC REIT, sponsor Keppel, Digital Core REIT, NTT DC REIT, Mapletree Industrial Trust, CapitaLand Ascendas REIT, and their respective sponsors have some part to play in AI infrastructure.
Keppel, through its funds and operating entities, supplies power, water and, more recently, subsea cables. Sembcorp Industries, a leading power provider, also plays a critical role. Without power, a data centre is merely a shell; it is power that renders it operational.
For instance, when Singapore-headquartered DayOne broke ground on its 20MW data centre in Singapore on July 25, it announced a 10-year power purchase agreement with Sembcorp Power. “The rapid rise of AI infrastructure is driving unprecedented energy demand, and meeting this demand sustainably is critical to the future of the data centre industry. Our collaboration with DayOne reflects our commitment to powering the next-generation digital infrastructure with clean, future-ready solutions,” said Koh Chiap Khiong, president and CEO of Gas and Related Services and CEO for Singapore at Sembcorp Industries on July 25.
In June, DayOne secured 500MW of solar power for 21 years from Tenaga National (TNB) for its data centres in Johor. TNB’s renewable power subsidiary will supply the solar energy and will power DayOne’s Nusajaya Tech Park in Gelang Patah and Kempas Tech Park in Johor Bahru, which together have a combined capacity of 120MW. YTL Power is another vital player in Malaysia’s data centre sector.
See also: S-REITs stirring with IPO and yield compression
Capital to build and operate the data centres is another key component. In June, OCBC and its Malaysian unit OCBC Bank (Malaysia) acted as joint coordinators for a syndicated financing for DayOne, which involved DBS Group Holdings, United Overseas Bank, CIMB, Maybank, Credit Agricole and Standard Chartered. The total amount of the syndicated loan was RM15 billion ($4.5 billion).
DayOne’s largest shareholder is GDS Holdings, but its CEO Jamie Khoo says the entity’s operations and strategy are independent of GDS. SoftBank Vision Fund, Kenneth Griffin (CEO of Citadel), Coatue Management and Baupost Group participated in DayOne’s Series A and B funding rounds. According to press reports, Hillhouse and Rava Partners also participated in DayOne’s funding.
Many components
See also: Manulife US REIT one sale away from meeting divestment goal, but what’s next?
In the white paper, Brookfield says: “AI has the potential to significantly reduce the marginal costs of producing all essential resources and lead to a so-called Age of Abundance. AI-led automation could lead to massive growth in global GDP, potentially reaching US$10 trillion ($12.8 trillion) in annual economic productivity gains in the next decade.” US$10 trillion is meaningful, especially to the US economy which is around US$30 trillion. The infrastructure to support AI is likely to “exceed US$7 trillion in the next 10 years” adds Brookfield.
The AI value chain comprises many components. The physical assets and services that enable AI at scale include data centres (often described as AI factories), power and transmission, compute infrastructure, adjacent sectors such as fibre and cooling solutions, and capital. In the Singapore context, Keppel DC REIT is as important to inferencing data centres as its sponsor Keppel or index stock Sembcorp Industries, both of which are power providers.
As the Brookfield white paper explains, unlike the cloud data centres that are predominant today, AI factories are modern digital hubs that incorporate advanced cooling (liquid or immersion) and specialised networking (InfiniBand or Ethernet) to cluster thousands of chips.
“By the end of 2025, we expect that AI factories will expand to 15GW of power capacity online from only 7GW at the end of 2024. Over the next 10 years, we expect them to add an additional 75GW. This would bring total AI data centre capacity to roughly 82GW by 2034, more than a tenfold increase in a decade,” adds Brookfield.
No surprise then that electricity supply becomes a mission-critical concern and energy solutions are needed to power data centres.
In the US, some large developments are deploying onsite natural gas turbines to meet demand where renewables or grid upgrades can’t ramp up fast enough. Nuclear energy is making a comeback. Google signed a small modular reactor (SMR) power agreement to secure 24x7 carbon-free energy for data centres.
In October 2024, Microsoft signed a 20-year agreement with Constellation Energy to power up the Three Mile Island’s Unite 1 reactor to support its AI strategy.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
Pairing behind-the-meter generation with energy storage solutions can also help AI factories manage demand changes and integrate intermittent renewables more effectively, the white paper says. Battery storage systems can provide critical power resilience by supporting backup power and grid stability during peak loads or outages of graphic processing units (GPUs).
GPUs are the key to AI compute, which is why Nvidia appears overvalued. In 2024, Microsoft reportedly acquired nearly 500,000 Nvidia GPUs and Meta over 200,000. “GPUs have become one of the largest and fastest-growing tech markets. We project the installed base of GPUs will grow about 7 times, from 7 million in 2024 to 45 million by 2034, representing over US$4 trillion in cumulative GPU hardware sales over that period,” the Brookfield white paper says.
On the financing front, Brookfield adds: “We are seeing opportunities to provide capital partnerships by structuring financeable contracts with attractive infrastructure characteristics such as strong cash yields, long-term contracts and downside protections with investment-grade offtakers.”
Data centres, which are the AI factories, are expensive to build. As a rough estimate, it costs US$10 million per megawatt according to Udhay Mathialagan, CEO of Brookfield’s Data Center Group. He adds that his customers spend a further US$4 in a data centre for every US$1
Brookfield spends. A 100MW data centre would roughly cost US$1 billion.
In an interview in May, Mathialagan said different types of capital are required at various stages of a data centre’s lifecycle. For example, the highest risk is typically associated with the land acquisition and construction phase. Different types of capital need to be invested in data centres at various points in time as the development risk decreases. Brookfield invests its capital first, and along with that, the capital of its capital partners. Brookfield offers a full range of funds, from core-plus to core, and now features a super-core fund for assets with contracted cash flows.
Local data centre plays
Martin Siah, Singapore country head and CEO for Bank of America, observes that the city-state is a listing venue for the second and third largest owner-operators of data centres.
“We managed to execute the NTT DC REIT initial public offering (IPO). The capital raised was about US$1 billion, and it was the second-largest real estate IPO globally, year to date,” Siah says. “The last major IPO on the Singapore Exchange in 2021 was that of Digital Core REIT. We only focus on the large transactions. The sponsors of these REITs, Digital Realty and NTT, are the second and third-largest data centre operators in the world. And they both decided to list their data centre REITs in Singapore. That is a very strong message.”
Equinix, the world’s largest data centre owner-operator, is building its sixth data centre in Singapore with a capacity of 20MW to be completed in 2027. The country’s industry ecosystem allows companies to interconnect directly to leading providers, partners and customers in their digital supply chain. Singapore is the regional digital hub and acts as the centre for digital exchange, Equinix says.
The city-state’s data centre utilisation rates are among the tightest in the world, with almost no spare capacity. As a data centre hub, Singapore holds strategic importance due to its position as Asia’s leading financial centre and its geographic role as a key connectivity gateway, linking Southeast Asia to the global network through 26 subsea cables and three landing sites.
Factors that make a location attractive to data centre providers include ease of doing business, streamlined entitlement approvals, strong property rights and rule of law, supportive local utility providers, low exposure to natural disasters and a well-regulated tax environment.
Evidence of the nation’s tight data centre capacity came in the form of Keppel DC REIT’s positive rental reversions of 51% in 1H2025, largely for colocation leases at SGP4 in Singapore in 2Q2025, which accounted for 11% of rental income.
The guidance for the 2H2025 is for rental reversions to be in the range of high single digits to low double digits. “We all know we are in a supply-constrained situation, and strong demand signals, and that helps,” says Loh Hwee Long, CEO of Keppel DC REIT’s manager.
In a report dated Aug 26, UOB Kay Hian says Keppel DC REIT’s portfolio remains under-rented vs market rents, despite substantial rent reversions previously. “We believe data centre rents typically revert to market only when tenants exit, and that, despite the substantial reversions, rents may remain below market when an existing tenant renews to maintain the partnership with large hyperscaler tenants,” writes Jonathan Koh, an analyst at UOB Kay Hian.
PUE or Power Usage Effectiveness improvement is an avenue for growth that Keppel DC REIT’s manager is exploring. For example, prior AEIs at KDCREIT’s colocation data centres have achieved a >10% reduction in PUE.
Jun Yang Teh, an analyst at Bloomberg Intelligence, says income growth for Singapore REITs with data centre exposure, notably Keppel DC REIT, can jump this year on higher rents and purchases. Robust digital economy expansion could spur data centre demand, especially from Generative AI, which is set to increase revenue by a 30% CAGR till 2032. Other drivers include cloud computing, Internet of Things and 5G, he adds.
As of Aug 26, Keppel DC REIT’s unit price has returned 7.5% this year. Keppel DC REIT announced a DPU of 5.133 cents for 1H2025, translating into an annualised yield of 4.4% as of Aug 26. The Bloomberg analysts’ poll shows most analysts have a buy on Keppel DC REIT except for Morningstar and Phillip Capital.
