Should CapitaLand Ascendas Reit rejig its portfolio further in favour of data centres and life sciences assets? 

[SINGAPORE] CapitaLand Ascendas Reit’s (Clar) portfolio has seen a fair amount of activity in the past few months. 

It has divested some of its legacy logistics assets while growing its exposure to data centres and life sciences. 

For example, in August, the real estate investment trust sold five industrial and logistics properties to an EZA Hill-led consortium for S$329 million.

The properties, bought between 2003 and 2005, were divested at a premium of about 6 per cent above their total market valuation of S$311.3 million, and a 20 per cent premium to their original purchase price of S$274.2 million. 

The sale of these assets is timely, given how JTC figures show industrial property prices have risen 27.7 per cent since hitting a recent low in the third quarter of 2020. 

Over the past 20 years, these assets have also benefited from asset enhancement initiatives – such as in the case of 9 Changi South Street 3, and improved connectivity resulting from the completion of nearby MRT stations, as with 31 Ubi Road 1. 

Alongside the divestments, Clar has also been making acquisitions. It announced in May that it will acquire 9 Tai Seng Drive, a fully occupied colocation data centre, and 5 Science Park Drive, a business park property in the Geneo life sciences cluster in Singapore Science Park. 

Assuming the acquisitions were completed on Jan 1, 2024, the acquisitions would have led to a distribution per unit accretion of 1.36 per cent, Clar’s manager said. 

The addition of 9 Tai Seng Drive will significantly expand the Reit’s data centre footprint by 32.8 per cent to about S$1.9 billion in asset value, the manager said. 

Since the acquisition, data centres have grown to become Clar’s second-largest group of tenants as at Sep 30, from the sixth-largest as at Jun 30.  

Meanwhile, the acquisition of 5 Science Park Drive, which is fully leased to Shopee, reinforces Clar’s market leadership in the Singapore business space and life sciences segment, it said. 

However, data centres and life sciences assets remain the smallest segments of the Reit’s portfolio in terms of asset value. 

As at Sep 30, Clar manages S$17.7 billion in investment properties, of which life sciences constitute 8 per cent and data centres, 11 per cent. Business space accounts for 36 per cent, followed by logistics at 26 per cent, and industrial assets, 19 per cent.

Given these assets’ growth potential, it makes good business sense for Clar to grow its data centres and life sciences holdings and future-proof its portfolio. 

Winds of opportunity 

At the point of acquisition, William Tay, chief executive officer of Clar’s manager, said 9 Tai Seng Drive and 5 Science Park Drive will steer the Reit’s portfolio towards the technology sector. 

He added: “This aligns with Clar’s strategy to leverage... global growth trends in technological advancement and digital transformation, while diversifying and strengthening its customer base.” 

It is timely for Clar to increase its data centre exposure given recent positive developments, such as the Infocomm Media Development Authority’s 2024 launch of the Green Data Centre Roadmap, which sets out how at least 300 megawatts (MW) of additional capacity will be added in the next few years. 

Another encouraging move for the data centre industry is the announcement that Singapore will set aside 20 hectares of land on Jurong Island to develop the country’s largest low-carbon data centre park, which can accommodate up to 700 MW of power capacity. 

Investors are also paying attention, with private equity giant KKR and Singtel recently said to be exploring a buyout of ST Telemedia Global Data Centres, which could be one of Asia’s largest data centre deals. 

With strong regulatory backing in Singapore and the rising demand from artificial intelligence and cloud computing, Clar should keep a lookout for good data centre assets to acquire.

Already, the Reit’s data centre portfolio has grown almost threefold from S$0.5 billion in 2020 to about S$1.9 billion as at Sep 30, 2025, Tay told The Business Times.

Strong demand 

Life sciences may also be a bright spot for Clar moving forward.

In the first nine months of 2024, Singapore led the Asia-Pacific region in life sciences investment volume, according to a JLL report. 

Demand for high-quality life sciences and research and development facilities is certainly strong. Singapore is a pharmaceutical hub, with eight of the top 10 global firms, including Pfizer and Johnson & Johnson, having established their regional headquarters here. 

The Republic is now home to more than 70 biotech companies, a sevenfold increase from 2012. 

It appears to be an astute move by Clar to acquire 5 Science Park Drive, which will solidify its competitive positioning in the Geneo life sciences cluster.  

The cluster is also home to the recently redeveloped 1 Science Park Drive, which had 95 per cent of its space committed or in advanced negotiations as at April 2025.

The majority of tenants come from the life sciences, innovation and technology sectors. 

Perhaps Clar can also look into revamping some of the older life sciences buildings in Science Park, such as Cintech III and IV, to enhance the innovation ecosystem. 

There is potential for an uplift in occupancies, given that the pair of buildings had an occupancy of 77.8 per cent as at Jun 30. 

Limited supply 

While there are strong tailwinds driving the data centre and life sciences sectors in Singapore, Clar may face limitations in scaling its portfolio. 

Life sciences assets are located mostly in three clusters – CapitaLand Group’s Singapore Science Park, as well as Tuas Biomedical Park and Biopolis. 

Some of the buildings in Tuas Biomedical Park and Biopolis are owned by JTC, while others are purpose-built by multinational corporations such as AbbVie and WuXi Biologics. 

Likewise, data centres tend to be tightly held, with only S$2.7 billion in transactions taking place over the past two years, based on estimates by Cushman & Wakefield. 

Perhaps one option is for Clar to focus on redeveloping its existing data centres in the meantime, to increase yields. For instance, its older data centres at Kim Chuan Telecommunications Complex and 38A Kim Chuan Road could be ripe for redevelopment, although they remain fully leased to Singtel. 

Clar is also redeveloping its Welwyn Garden City data centre in London to increase capacity. 

Another option for the Reit is to see whether there are opportunities to acquire data centre assets in Johor, which is now the fastest-growing data centre hub in South-east Asia. 

With Clar in a prime position to capitalise on its advantage in data centres and life sciences assets, this is the right time to seize the opportunities.