Navigating Cycles | The Rationale for Data Centre Investment

Led by the launch of DeepSeek-R1 in January 2025, recent breakthroughs in China’s large-model capabilities and sharply lower deployment costs are driving the rapid emergence of Artificial Intelligence (AI) applications across a broad range of sectors. This has spurred the launch of AI Agents; autonomous software systems that harness AI to perform tasks for users.
 
Demand for computing power has consequently shown strong growth momentum. IDC estimates China’s intelligent computing power will reach 1,037.3 EFLOPS in 2025, with a 168% surge projected by 2028.
 
Being the physical repositories of computing power, data centres are poised for new growth opportunities, with leading domestic internet firms planning to boost capital spending on cloud and AI infrastructure. CBRE expects Tencent’s, Alibaba’s and Baidu's combined 2025 capital expenditure to exceed RMB 230 billion, 1.5x 2024 levels.
 
KZ Consulting forecasts China IDC market to see a 32% CAGR from 2025 to 2029. Following recent data centre REIT launches, data centre investment demand continues to grow, with the sector set to emerge as a focal point of China's commercial real estate investment market during the 15th Five-Year Plan period.
 
This report examines data center industry trends, leasing market dynamics, and investment developments. It aims to offer multidimensional insights to guide decision-making and explore future growth opportunities