Singapore Data Centre REITs Post Strong H1 Gains on Cloud and AI Demand

Structural Tailwinds Drive Performance

Singapore's three pure-play data centre real estate investment trusts reported resilient operating metrics for the half-year ended June 30, anchored by occupancy rates above 92 percent and rental reversions in the double digits. The performance reflects broader momentum across Asia-Pacific, where capacity additions are accelerating to meet cloud services and artificial intelligence infrastructure requirements.

Keppel DC Reit announced distributions per unit climbing 11.3 percent year-on-year in the first half of 2026, driven by positive rental escalations and higher effective stakes in its Singapore 3 and 4 assets. Portfolio rental reversion reached approximately 10 percent for the period. Occupancy by lettable area stood at 92.5 percent, impacted by the expiry of a lease at its Cardiff facility; excluding that site, the rate would have held at 95.3 percent, matching the first quarter level.

With aggregate leverage at 34 percent, the trust retains debt capacity for expansion. Management is evaluating asset repositioning initiatives, power intensification measures, and acquisitions targeting facilities capable of serving hyperscaler tenants.

Digital Core Reit maintained stable distributions per unit despite a dip in net property income, as higher contributions from associates balanced the shortfall. The trust repurchased eight million units during the half at an average price of US$0.488, generating distribution accretion of around 0.4 percent. In-service portfolio occupancy remained at 97.3 percent, with weighted average lease expiry of 4.3 years. New and renewal leases totaling US$5 million in annualised rent were secured, achieving cash rental reversions of 25 percent.

In January, Digital Core Reit reached agreement with an investment-grade global cloud provider for its Linton Hall asset, with the lease expected to commence in December and generate approximately US$13.3 million in annualised net property income at the trust's 90 percent ownership share.

Post-IPO Momentum for NTT

NTT DC Reit recorded positive leasing activity following its initial public offering, with occupancy rising to 95.9 percent after securing expansions across two US data centres and one in Singapore. Including committed leases, occupancy is projected to climb to 99.2 percent, with most committed agreements expected to begin contributing revenue in the third quarter of fiscal 2026-27.

Net property income for the quarter ended June exceeded IPO projections by 5 percent, supported by lower taxes, reduced operating expenses, and favorable foreign exchange movements. Distributable income outpaced forecasts by 10.6 percent. The trust maintained aggregate leverage of 31.0 percent and weighted average lease expiry of 4.3 years. Management plans to hold an extraordinary general meeting by the third quarter of fiscal 2026-27 to address a potential revision to the management fee structure.

Regional Capacity Expansion

Property consultancy JLL noted in its 2026 Global Data Center Outlook that nearly 100 gigawatts of new capacity will be added between 2026 and 2030, doubling global supply. The sector is projected to expand at a 14 percent compound annual growth rate through the end of the decade.

Cushman & Wakefield reported in its Asia Pacific Data Centre H1 2026 Update that the region sustained strong growth momentum in the first half, propelled by demand for AI workloads, cloud services, and enterprise digital transformation. The expansion is visible in development pipelines across key markets including Singapore, Tokyo, and Mumbai.

Several diversified Singapore REITs are also increasing their data centre exposure. CapitaLand India Trust completed and leased its first liquid-cooled data centre to a global hyperscaler tenant in fiscal 2026, with additional projects on track for completion by year-end. Stoneweg Europe Stapled Trust announced in August that its dual-track strategy, combining organic and inorganic growth, is expected to lift data centre exposure to between 15 and 25 percent by 2028, up from 7.2 percent currently.

Mapletree Industrial Trust, CapitaLand Ascendas Reit, and CapitaLand India Trust also maintain varying levels of data centre holdings within their broader portfolios.

Sector Outlook

The sustained demand for colocation and build-to-suit facilities reflects the infrastructure requirements of large cloud platforms and enterprises deploying AI applications. Hyperscalers continue to seek sites with sufficient power capacity, connectivity, and proximity to network hubs, characteristics concentrated in established markets like Singapore.

Rental reversion strength across the three pure-play trusts signals tightening supply-demand dynamics, even as new capacity enters the market. The ability to secure long-term leases with creditworthy tenants provides revenue visibility and supports distribution stability.

Portfolio optimization efforts, including power upgrades and selective asset recycling, position the trusts to capture incremental demand from workloads requiring higher density infrastructure. With leverage levels below 35 percent across the group, balance sheet capacity exists for both organic expansion and acquisitions as opportunities emerge in the region's evolving data centre landscape.