The REITs market is poised to welcome a groundbreaking asset class as data centers emerge as the latest underlying assets. Amid persistently low market interest rates, investors have surged into REITs, fueling robust first-half performance. Year-to-date through July 10, the CSI REITs Total Return Index delivered an impressive 14.24% return.
On Monday, July 14, the inaugural pair of data center REITs opens for subscription. These pioneering instruments could reshape the public fund landscape with their novel asset foundation.
Product diversity dominates next week’s offerings. At least 29 new funds launch subscriptions between July 14-18, predominantly on Monday. The lineup spans 18 index funds, five active mixed-equity funds, three bond funds, one FOF, and the landmark REIT duo.
These first-ever data center REITs spotlight third-party service providers GDS Holdings and Runze Technology—China’s leading data center operators with proven asset quality. According to CAICT’s 2024 China Computing Power Service Provider Report, GDS leads in market share and ranks first across scale, capabilities, and financial metrics. Southern Fund Management oversees both offerings.
The AI-driven computing boom has intensified data center scarcity, cementing their status as cash-flow-generating assets ideal for REITs. High client concentration and retention rates, alongside premium occupancy levels at top firms, ensure steadier returns than traditional property REITs.
Market appetite appears voracious. Offline inquiries recorded subscription multiples exceeding 166x for both REITs. Pricing neared range ceilings: Southern Runze Technology Data Center REIT finalized at 4.5 yuan/share (range: 3.020-4.531), while Southern GDS Data Center REIT settled at 3 yuan/share (range: 2.014-3.021). Institutional interest proved substantial, with dozens of securities firms participating. Southern Runze drew 190 brokerage asset management plans; Southern GDS attracted 60.
Notably, 2024’s previous REIT issuances sold out within single days—a benchmark these innovative assets may match.
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