Data centres remain relatively new for many institutional investors, with most portfolios still underweight in the sector. The growing spotlight on the sector, however, is clearly justified. The segment has delivered strong performance in both public and private markets, driven by stable, long-term cashflows and robust growth from cloud adoption, AI and broader digital trends.
The long-term growth prospect remains strong, but the sector also faces new considerations. Firstly, the question of overvaluation — driven by excitement about AI — has been raised. Secondly, concerns exist over development becoming more difficult due to land and power constraints, new regulations and community pushback. And thirdly, what does an exit look like in this environment?
The question of overvaluation
When examining the first question of overvaluation, it is essential to decouple the concepts of AI demand versus data centre demand. Demand for compute capacit
