The global data centre market is poised for strong expansion, driven by rising demand for cloud services, the Internet of Things, edge computing and AI. Yet, demand is expected to outpace supply. Market intelligence provider DC Byte forecasts global data centre demand to grow at a compound annual rate of 19.4% from 2024 to 2028, while supply (both self-built and colocation) is projected to increase by 18.3% over the same period.
Maybank Securities has initiated coverage on Keppel DC REIT (KDC REIT), calling on investors to “buy” at a target price of $2.40. It cited structural demand from digitalisation, cloud migration and artificial intelligence (AI) adoption as key growth drivers.
The target price is based on a 6.7% cost of equity and a 2% medium-term growth rate. Analyst Krishna Guha notes that while the REIT trades at 1.4 times price-to-book (P/BV) and a yield spread of 230 basis points (which is below the historical mean of 278 basis points), the REIT’s track record and strong data centre dynamics justify the valuation.
