KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
Key Takeaways
- AI workloads are fueling global data center demand, with capacity needs projected to grow at a 22% CAGR to 219GW by 2030.
- Leasing demand from hyperscale operators (AWS, Google Cloud, Meta) has shifted the lease-to-build ratio to 70:30, benefiting REITs.
- Singapore is strengthening its position as a digital hub with subsea cable expansion and near-zero vacancy rates.
- CapitaLand Ascendas REIT and Keppel DC REIT lead sector performance in 2025, while NTT DC REIT attracts attention as a new entrant.
- Rate cut expectations and supply constraints support dividend sustainability and valuation recovery.
Demand Acceleration
The rise of generative AI is reshaping digital infrastructure requirements. Global demand for data center capacity is projected to expand at 22% annually through 2030, with AI-ready facilities growing at a faster 33% CAGR. By the end of the decade, AI-optimized centers could make up 70% of total capacity. A notable trend is hyperscale operators shifting to leasing rather than building, with the lease-to-build ratio now 70:30. This structural change provides a tailwind for data center REITs, ensuring recurring and stable demand.
Singapore as a Strategic Hub
Singapore’s digital economy push, underpinned by investments to double subsea cable capacity by 2030, positions it as a critical Asia-Pacific hub. Low vacancy rates around 2% reinforce supply scarcity, while rising AI compute and power requirements increase reliance on hyperscale facilities. These factors underpin a favorable macro and technological backdrop for Singapore-listed data center REITs.
Supply Constraints and Financing Tailwinds
Vacancy rates across major markets, including Singapore and North America, remain at multi-year lows. At the same time, market optimism over future rate cuts is expected to lower financing costs, strengthening dividend sustainability and improving balance sheet flexibility. Combined with demand growth, this environment supports valuation resilience and recovery.
Spotlight on Leading REITs
CapitaLand Ascendas REIT (A17U.SG): Delivered a 13.85% YTD gain with a 7.86% dividend yield (TTM). Its diversified portfolio and strong occupancy provide steady rental growth backed by hyperscale tenants.
Keppel DC REIT (AJBU.SG): Up 12.01% YTD with a 3.97% yield, supported by strategic acquisitions and high-quality hyperscale tenants.
DigiCore REIT (DCRU.SG) and Mapletree Industrial Trust (ME8U.SG): Despite modest YTD price declines, they offer healthy yields of 5.96% and 6.51% respectively, reflecting resilience in market downturns.
NTT DC REIT (NTDU.SG): Recently listed with an indicative 7.5% yield. While the share price has dipped slightly below IPO levels, its six-asset portfolio across the US, Austria, and Singapore enjoys high occupancy above 90%. Expansion into Japan and other key markets will be closely watched for growth sustainability.
Outlook
Analysts expect sustained growth in Singapore data center REITs as AI-driven workloads fuel capacity demand. Stable tenant profiles, scarcity of supply, and a supportive macro environment provide attractive risk-adjusted returns. For investors seeking both income and growth, the sector remains well-positioned to capture the next leg of digital infrastructure expansion.
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