As the AI industry enters the next phase of its boom, there is a data centre REIT that is also positioning itself for this.
Keppel DC REIT’s valuation has turned attractive at the current point, and it has also made some important moves in other countries that warrant a look.
Let’s take a deep look at its prospects currently.
What does Keppel DC REIT do?
Keppel DC REIT (KepREIT) owns and operates data centre assets in Asia Pacific and Europe. The largest exposure comes from Singapore, where it holds 63% of its assets, followed by Japan (13.6%) and Ireland (5.4%).
Source: KepREIT 1Q 2026 Business Updates
Most of its clients are from the internet enterprise segment (70%), while the IT services and telecommunications segment make up 14% each. KepREIT is highly exposed to the AI data centre segment for better (riding the AI boom) or for worse (no diversification). Its Top 10 tenant concentration has increased from 78% in 2024 to 84% in 1Q 2026, increasing the risks of overconcentration.
1Q 2026 Results Show Strong Performance
For its latest 1Q 2026, revenue grew by 18.4% while distributable income was up by 20.7%. This strong performance was driven by:
Acquisition of Tokyo Data Centre 3 and remaining interest in Keppel DC Singapore 3 and 4
Higher contributions from contract renewals. Portfolio reversion was at 51%.
In the past five years, revenue has grown by 1.5 times from SG$271 million in 2021 to SG$441 million in 2025, driven by higher AI-related demand. Meanwhile, distributable income had also almost doubled from SG$171 million to SG$268 million.
Source: Shareinvestor
Still Strong Market Outlook
The global AI markets have gone through a downturn in recent months, as investors are worried about overvaluation and bubbles. They are unsure about the returns on investments from huge AI investments by big technology companies. Despite those worries, the prospects within the industry remain intact for KepREIT as it acts as a ‘shovel’ in providing computing power to its clients. The AI industry is shifting towards AI inference processes, and this is projected to encompass 43% of demand by 2030.
Source: KepREIT 1Q 2026 Business Updates
In its Annual General Meeting minutes, KepREIT has reaffirmed to investors that KepREIT’s assets are positioned to ‘support cloud and AI inference workloads’ and has ‘pivoted to the hyperscale segment, across both cloud computing and emerging AI use cases, including agentic AI’.
Meanwhile, its sponsor, Keppel, has also developed a vast data centre asset base with a capacity of 1.0 GW that KepREIT can take advantage of by 2028.
Singapore: Keppel has secured the contract to build KDC SGP9 at Genting Lane.
Japan: Keppel signed an MoU with Mitsui Fudosan to develop in Japan and Southeast Asia
South Korea: Entered market via 73% stake in 60MW data centre in Ansan, Seoul
The View from the Market
Market analysts are targeting an average price of SG$2.66 with an implied upside of +18.9%.
Source: Shareinvestor
KepREIT is trading at higher valuations compared to its local peers' price-to-book ratio average of 1.3 times, but cheaper compared to global peers.
Company | Price-to-Book Ratio (x) |
Keppel DC REIT | 1.31 |
Mapletree Industrial Trust | 1.18 |
CapitaLand Ascendas REIT | 1.07 |
Frasers Logistics and Commercial Trust | 0.86 |
Equinix | 7.19 |
Digital Realty Trust | 2.88 |
Source: Shareinvestor
Conclusion
KepREIT represents a data centre REIT that is riding the current transition into the next phase of the AI boom - AI inference. It has made strategic expansions into Japan and South Korea, and has a core base of data centres in Singapore.
Investors can take a look at the REIT as a ‘shovel’ play in the data centre industry for the next 3 to 5 years.