Keppel eyes constrained markets as next frontier of data centre growth

[SINGAPORE] Keppel is targeting data centre markets where land and power are scarce, betting that these very constraints that its competitors avoid would allow it to charge higher prices.

Wong Wai Meng, CEO of Keppel’s data centre business, said: “When there are constraints, it is where we believe we will have the right to play and the right to make our margins.”

Speaking to The Business Times in an exclusive interview, he added: “Although it’s more costly per megawatt per unit, we are able to command a higher premium because customers are willing to pay the premium.”

Charging higher prices in constrained markets is not an uncommon practice among data centre operators.

Earlier this year, data centre real estate investment trust (Reit) NTT DC Reit secured a 23 per cent rental uplift on renewal for one of its data centres in Singapore.

Keppel also has data centre presence in markets with land and energy constraints; these markets include Taiwan, Japan and, more recently, Korea.

Being competitive still matters in these constrained markets, though. Wong said: “If you are side by side, or equal, (Korean companies) will choose their own Koreans.”

Keppel’s internal funding

He said Keppel will fund this next phase of growth through its balance sheet as well as through its private fund, Keppel Data Centre Fund (KDCF).

This funding arrangement enables the group to generate the capital required to acquire data centres without paying the full balance through its balance sheet, he added.

“If Keppel is putting $2 inside a $10 fund, we are using $2 to do five times the capacity, instead of finding $10 (from) inside the balance sheet,” Wong said.

KDCF III, the third vintage of the data centre fund, had about S$2.7 billion in funds under management as at the end of 2025.

When data centres mature, they can be recycled through Keppel DC Reit, the group’s locally-listed, pure-play data centre Reit.

“(Keppel DC Reit) is very effective,” said Wong, noting that through the combination of KDCF and the Reit, the connectivity division now has about S$13 billion in funds under management.

The Reit alone had S$6.3 billion in assets under management, and a portfolio of 25 data centres in 10 countries as at the end of 2025.

Power as an opportunity

But Wong recognises that as Keppel seeks out constrained regions for its next phase of growth, these very constraints are also what would limit its ambitions for data centre expansion.

“Power is the constraint today,” he said. “The whole world is running out of power.”

Data centres are not the only thing driving the demand for power; the electrification of the world – encompassing the rising demand of electric vehicles – is also doing so.

Because of the squeeze on land, power and water, Keppel has had to engineer new ways to address the constraints.

One solution it has found is the 25 MW floating data centre in Singapore. The group developed a seawater cooling system for it, and also engineered a solution for the corrosion risks seawater poses. The facility begins operations in 2028.

It has already secured a customer which has signed up for 100 per cent of its capacity, and secured permits from the relevant agencies, Wong said.

He added that Keppel’s heritage in the power-generation business puts it ahead of its peers in navigating around the high power demands.

“I won’t call it an unfair advantage. I call it a natural advantage,” he said.

The Singapore government is seeking to build at least 200 MW of data centres, and Keppel’s commitment to green energy has enabled it to meet the stringent energy requirements of the project.

Wong confirmed that Keppel has placed a bid for it.