Keppel DC-REIT is pursuing a strategic approach to secure sustainable growth amid evolving demands in the global data centre (DC) market. The Singapore-based real estate investment trust (REIT), which manages a portfolio of data centres primarily across Asia and parts of Europe and Australia, is balancing long-term leases with shorter-term co-location agreements to optimize returns and manage risk.

Loh Hwee Long, chief executive of Keppel DC-REIT’s manager, outlined the firm’s hybrid leasing model, which blends large-scale hyperscaler tenants with smaller clients such as financial institutions and government agencies. Approximately 30% of the REIT’s leased assets are tied to long-term contracts, typically 15 years or more, with hyperscalers—major cloud services operators. The remainder of the portfolio is leased on shorter terms through co-location arrangements, where tenants rent space to operate their own servers.

Loh compared this mix to a shopping mall’s tenant structure, with hyperscalers acting as anchor tenants providing stability but limited growth potential, while co-location clients resemble smaller tenants that can generate higher rental yields. This strategy enables Keppel DC-REIT to maximize organic growth beyond typical annual increments.

Hyperscalers represent a significant portion of the REIT’s client base, with half of its largest ten tenants falling into this category. One unnamed hyperscaler accounted for 43.5% of total rental income in the first half of 2026, which amounted to S$210.4 million. Largest non-hyperscaler clients contributed about 15% of income, reflecting the diversified yet targeted tenant mix.

Keppel DC-REIT’s focus remains on tier-one markets including Singapore, Japan, and South Korea. On September 1, the REIT completed the acquisition of two freehold co-location data centres in the Greater Tokyo area for approximately S$1.4 billion, increasing its assets in Japan to four. Loh highlighted that these markets feature mature infrastructure, well-established hyperscaler clusters, and high barriers to entry resulting from limited land and power supply. For example, new data centre construction in Japan can take five to seven years due to energy constraints and construction sector challenges.

While Malaysia’s data centre market, particularly in Johor, has expanded with around 34 providers, Keppel DC-REIT currently does not prioritize this region. Loh noted that Malaysian data centres typically support different workloads compared to the critical business systems hosted in Singapore. Nonetheless, the REIT remains open to investment opportunities in Malaysia if pricing aligns with strategy.

Singapore’s data centre sector continues to face strong demand despite a 2019 moratorium on new developments aimed at managing limited land and energy resources. The government’s planned release of 200 megawatts of new capacity to four data centre operators, including Keppel Data Centres, is unlikely to fully meet Singapore’s growth needs, according to Loh. The REIT sees opportunities to capture premium rents from clients seeking reliability and security in these constrained, high-demand markets as AI and cloud computing drive ongoing data centre expansion.