UOB Kay Hian (UOBKH) has maintained an “overweight” stance on data centre real estate investment trusts (REITs), predicting continued growth in demand over the next five years despite tariff challenges. This is due to rising global demand for AI-ready data centres fuelled by the advent of next-generation, reasoning artificial intelligence (AI) models including OpenAI GPT-5, according to a recent report by the financial services firm.
“The new AI models as well as a potential shortage of AI-ready data centres will drive the next wave of demand for data centres,” said UOBKH analyst Jonathan Koh who led the analysis. Koh added that rising global demand for data centres will remain robust and largely insulated from adverse tariff effects.
Among its top REIT picks are Digital Core REIT, Keppel Data Centre REIT and Mapletree Industrial Trust which are all assigned a ‘buy’ rating.
Data from McKinsey had forecasted global data centre capacity demand to expand at a compound annual growth rate (CAGR) of 22 per cent from 2023 to 2030, reaching an annual demand of 219 gigawatt, while demand for AI-ready data centres, is projected to increase at a higher CAGR of 33 per cent, Koh said.
“Future demand for data centre capacity depends on the pace of adoption for advanced AI use cases,” he continued, citing Nvidia chief executive Jensen Huang, who had stated that reasoning AI models consume more than 100 times the resources compared to conventional non-reasoning AI models. This surge in demand will inevitably drive substantial investment in computing and digital infrastructure including data centers.
“Global data center annual capital expenditure could reach US$1 trillion by the end of 2030. However, escalating trade tensions between the United States, Europe, and China might dampen this bright outlook,” Koh cautioned.
