Data centre real estate investment trusts (REITs) have captivated investors in a way few other REIT sectors can, and for good reason. Data centres sit at the heart of some pretty powerful global structural growth trends: AI, cloud computing, and increasing digitalisation. These underlying shifts have enabled data centre REITs to post stronger growth rates compared to their REIT peers operating in retail, commercial, or industrial sectors. However, has this “must-own” narrative played out?

Why Data Centre REITs Became Market Leaders

The explosive rise in AI, cloud computing, and digitalisation has led to an insatiable demand for digital infrastructure such as data centres. Data centre leases are typically long-term in nature, anchored by high-quality tenants (usually hyperscalers). This combination of factors has allowed these data centre REITs to post higher rental reversions and net property income (NPI) compared to other REITs. The key takeaway here is that these growth trends are expected to last multiple years...