At a glance
Keppel DC REIT's chief executive told The Straits Times on 16 September that the trust runs its data centres like a shopping mall, with hyperscalers as the anchor tenants.
About 30 per cent of its assets go on long hyperscaler contracts at lower rates, and the rest on shorter colocation leases where rents can be raised at each renewal.
He named Singapore, Japan and South Korea as the Tier 1 markets where tight supply lets the owner set rents, and Australia sits outside that list.
On CBRE's March quarter figures, Sydney had 4.5 per cent of its data centre space vacant against Tokyo's 6 per cent, and asked US$188 per kilowatt a month against Tokyo's US$280.
The trust has signed new contracts at its Gore Hill building in Sydney and expects the asset's income to more than double from 2026.
Keppel DC REIT, the Singapore-listed real estate investment trust that owns data centres in 10 countries, runs its buildings the way a shopping centre runs its tenants, Loh Hwee Long, chief executive of the trust's manager, told The Straits Times in an interview published on 16 September 2026. "Actually, it's just like VivoCity," he said, pointing to the mall down the road from Keppel's HarbourFront office. The hyperscalers, meaning the large cloud providers, are the anchor tenants, like a supermarket or a department store: they pay lower rates and offer little growth. The shorter leases are the smaller pop-up stores, where he said "you can really drive up the yield with much higher rents".
The split is about 30 per cent of the trust's assets on hyperscaler contracts, which usually run at least 15 years, and the rest on colocation leases, where customers rent space and power for their own servers and the rent resets at each renewal. Unlike a mall, the trust fills those shorter leases mainly with large customers such as financial institutions and government bodies. Loh told the paper that the focus gives the trust more ways to grow, with annual growth no longer limited to 1 to 2 per cent: "that becomes our differentiator".
The Straits Times reported that the model suits the markets where the trust mainly operates. Singapore, Japan and South Korea are the trust's Tier 1 markets, where land and power are short and the owner can act as a price-setter for higher rents. Where capacity is plentiful, he said, hyperscalers use their buying power to win better lease terms. Australia, where the trust owns the Gore Hill Data Centre in Sydney, sits outside that tier.
On CBRE's figures for the March quarter, Sydney had 4.5 per cent of its data centre space vacant against Tokyo's 6 per cent, and asked US$188 per kilowatt a month, a third below Tokyo's US$280. Sydney meets the scarcity condition the mall model depends on, at rents less than half Singapore's. The trust's own Sydney building mixes both kinds of lease, and its new contracts there are expected to more than double the asset's income.
Keppel DC REIT names Singapore, Japan and South Korea as Tier 1
Loh ties his Tier 1 markets to how long it takes a competitor to add capacity. A new data centre in Japan can take five to seven years, he told The Straits Times, because the suspension of nuclear power has tightened energy supply and construction faces delays of its own. Singapore rations new capacity outright: it awarded about 200MW in August 2026, split 50MW each between four operators, one of them Keppel Data Centres. He said Tier 1 markets offer more growth than markets with abundant data centre capacity, where hyperscalers can use their bargaining power to secure more favourable lease terms.
Sydney asks US$188 per kilowatt a month on 4.5 per cent vacancy
CBRE, the property firm, reports vacancy and asking rent for Sydney, Tokyo and Singapore in the same Asia Pacific section of its Global Data Center Trends 2026 report, using March quarter data. Data centre space is priced by the power a customer reserves, so rent is quoted per kilowatt.
Market | Vacancy | Average asking rent (US$ per kW a month) |
|---|---|---|
Singapore | 2% | 403 |
Sydney | 4.5% | 188 |
Tokyo | 6% | 280 |
Source: Certified Strategic Editorial, CBRE Global Data Center Trends 2026, Q1 2026 data.
Sydney's vacancy sits between those of Singapore and Tokyo, two of Loh's three Tier 1 markets, and its asking rent is less than half Singapore's. CBRE records that Sydney pricing held firm despite a steady pipeline of new supply. JPMorgan drew the same gap in July, when it put Singapore rents at more than double Sydney's. CBRE converts every market to US dollars, so exchange rates move the comparison as well as rents.
Cushman & Wakefield, a second property firm, shows Sydney tightening on its own series, to 2.2 per cent vacancy at 30 June 2026 from 3.0 per cent in 2025. It also counts 61 per cent of Australia's data centre pipeline as leased to a customer before construction. Each firm counts a different set of buildings, which is why CBRE's 4.5 per cent and Cushman's 2.2 per cent can both be correct.
Sydney's planned capacity rose 83 per cent to 2,018MW
Cushman puts Sydney at 917MW operating, 116MW under construction and 2,018MW planned at 30 June 2026, and the planned figure rose 83 per cent in six months. Cushman counts capacity as planned once an operator has committed to and announced it, whether or not construction has started.
Planned capacity still needs a grid connection. Transgrid, which runs the New South Wales transmission network, says capacity to connect in the Sydney basin is largely exhausted, after more than 10GW of connection enquiries since late 2024 within a 12 kilometre radius in Sydney West. Once the remaining capacity is used, it says, new data centres in that area will need major network upgrades or major projects before they can connect.
Where capacity exists, AEMO, the market operator, says large data centre connections are targeting about two years from application to switch-on, which is shorter than the five to seven years Loh gives for a new build in Japan. In the Sydney basin, that two year clock starts once Transgrid can offer a connection.
Knight Frank puts Melbourne vacancy at 3.5 per cent
CBRE does not report Melbourne in its Asia Pacific rent comparison, so Melbourne needs a second source. Knight Frank's Data Centre Atlas 2026 measures it alongside all three of Loh's Tier 1 markets.
Market | Vacancy | Operating capacity |
|---|---|---|
Seoul | 1.3% | 738MW |
Melbourne | 3.5% | 443MW |
Singapore | 5.0% | 1,118MW |
Tokyo | 5.8% | 1,473MW |
Source: Certified Strategic Editorial, Knight Frank Data Centre Atlas 2026.
Knight Frank's Singapore figure of 5.0 per cent is higher than CBRE's 2 per cent, because the two firms count different buildings. Of the four markets in the table, Melbourne is tighter than Singapore and Tokyo and looser than Seoul. Research firm datacenterHawk put Melbourne below 2 per cent in April 2026, on a base of about 800MW of multi-tenant capacity.
Knight Frank counts 127MW under construction in Melbourne, 1.7GW committed and 7.3GW at an early stage, and four new campus applications entered Victoria's planning system between April and July. Keppel Ltd, the Singapore group that manages the trust, has leased a site near Morwell in the Latrobe Valley for a 720MW campus. Melbourne meets the scarcity condition on Knight Frank's count, and the rent condition awaits a published Melbourne rent series.
Keppel DC REIT expects Gore Hill income to more than double
At the end of 2025 the trust's only Australian asset was the Gore Hill Data Centre, a four-storey building in a technology park about 9 kilometres from the Sydney CBD. The trust's results presentation lists it under both lease types: a fitted colocation client, and a client that leases the shell, pays the outgoings and manages its own space. It was 80 per cent occupied by those two clients, its contracts had an average of 0.7 years left to run, and it was valued at A$214.0 million, 4.1 per cent of the trust's assets. Singapore made up 62.4 per cent.
With those contracts close to expiry, the trust told analysts at its half-year briefing in July that it had secured new contracts at Gore Hill and expected income from the asset to more than double from 2026 onwards, with further upside as leasing continues. Loh said the Gore Hill effect should lift the trust's third-quarter rental reversion, the change in rent on renewed contracts, to a low-teens range. The trust has not said how much of the increase comes from filling the empty fifth of the building and how much from higher rent on renewed space.
The trust also announced on 1 September a stake in two Tokyo colocation centres for about S$1.4 billion, which will lift Japan's weight in the portfolio. For investors weighing data centres in Australia against its Tier 1 markets, Gore Hill's new contracts are the Sydney rent evidence the trust has put on the record. Loh told The Straits Times that investors now better understand the trust's ability to deliver "outsized reversionary growth" against its peers, and Gore Hill is where Sydney adds to it.
What to watch
Keppel DC REIT's third-quarter update. The reversion figure will show whether Gore Hill delivered the low-teens lift Loh described.
AirTrunk's Singapore listing. AirTrunk, the Sydney-founded hyperscale operator owned by Blackstone and CPP Investments, is preparing a Singapore REIT with a seed portfolio including assets in Singapore, Australia, Japan and Hong Kong. Reuters reported a September or October launch. Its pricing will put a public yield on Australian hyperscale capacity alongside Keppel's.
The next rent and vacancy prints. CBRE's next global update will show whether Sydney's US$188 has moved. Cushman's second-half count, due in the first half of 2027, will show whether its 2.2 per cent has tightened further.
Transgrid's network upgrades. A major project that reopens connection capacity in the Sydney basin would add supply, which on Loh's reasoning weakens an owner's hand on price.