Datacenter yields in Singapore soften as investor appetite grows

More yield benchmarks are expected as stabilised data centers hit the market.

Singapore, along with Tokyo, Seoul, and Mainland China, is amongst the tier I Asian markets with relatively softer data center yields than those for traditional real estate sectors., CBRE reported.

In Asia Pacific, CBRE said that despite the rising cost of debt, data center yields have remained relatively stable over the past 12 to 24 months.

“Yield stability continues to drive institutional investment into the sector, with investors drawn to steady cash flows and attractive risk-adjusted yields. Data centers, particularly hyperscale centers, offer some of the most attractive income streams in the current landscape, with the lengthy lease tenures and strong credit covenants seen as especially attractive by investors,” CBRE said.

CBRE expects further transactional evidence on yields for data centers to materialise over the next six to 12 months, as assets stabilise and more properties are brought to the market for sale.

“This will help boost investment activity as establishing market exit values provides investors with further rationale to develop and invest in the sector within Asia Pacific,” CBRE added.

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