Experts bullish on local data centre industry amid surging AI demand

Surging demand for artificial intelligence (AI) and expanding digital infrastructure are driving massive investment in the local data centre industry, noted experts.

- Sue-Ann Tan

The strong performance of the sector is also reflected in the results being posted by locally listed real estate investment trusts (Reits) focused on these data centres.

Keppel DC Reit reported an 8.8 per cent year-on-year revenue increase for the second half of the 2024 financial year, which ended on Dec 31, while Digital Core Reit racked up a 9.8 per cent expansion in turnover to US$54 million (S$72.9 million).

DBS Group Research analysts Derek Tan and Dale Lai told The Straits Times: "We believe that 2025 will be another robust year for the data centre industry. This is especially true in Asia, where demand continues to outpace supply.

"Within Asia, we are the most positive about the Singapore market, as vacancy remains tight and new supply continues to be quickly absorbed."

They added that the growth in AI is one of the most promising trends for the industry.

"Although there are ongoing debates about how recent advancements such as DeepSeek will disrupt the industry, we see this as an opportunity. As AI models become faster and more cost-effective, we could see more rapid adoption, and this will be a boost for data centres overall," the analysts noted.