PETALING JAYA: Data-centre (DC) investments are increasingly generating spillover benefits across the wider property market, with demand extending beyond industrial land to residential, commercial, logistics and hospitality assets in surrounding areas.
Zerin Properties chief executive officer (CEO) Previn Singhe said while industrial real estate remains the most direct beneficiary, he emphasised that the impact of continued DC investment extends well beyond a single property segment.
“DCs should not be viewed as standalone industrial assets, but as catalysts for wider digital ecosystems that attract supporting industries, engineering services, utilities, technology firms and business services.
“It is these complementary activities that generate the broader multiplier effect across the property market,” he told StarBiz.
Previn said there are spillover effects into the commercial, residential and retail sectors, adding, however, that they are indirect and highly location-specific.
“They are most evident in established DC corridors such as Johor, where the concentration of digital infrastructure investment is fostering a broader ecosystem of technology related businesses, supporting industries and skilled employment.
“As these ecosystems continue to mature, they create opportunities for commercial space, quality housing, hospitality and neighbourhood retail, driven by increased business activity and workforce demand rather than the DCs themselves.”
That said, Previn said it was important “not to overgeneralise”.
“Not every DC development will generate the same level of economic multiplier effect.
“The long-term benefits depend on the quality of supporting infrastructure, transport connectivity, planning integration and the ability to attract complementary industries that strengthen the local economy.”
Increasingly, policymakers and investors are placing greater emphasis on projects that deliver meaningful local value creation through artificial intelligence, cloud services, innovation and technology development, rather than simply large capital commitments.
“Ultimately, the greatest value is created when DCs become catalysts for broader economic development rather than operating as isolated facilities.
“Locations that successfully integrate digital infrastructure with supporting industries, skilled talent and sustainable urban development will be the ones that realise the most enduring impact across the property market.”
Olive Tree Property Consultants founder and CEO Samuel Tan also said the spillover impact of DCs is still heavily concentrated in industrial real estate.
“It’s where the capital, the land repricing and the transaction volumes are,” he said.
Nevertheless, Tan said that other sub-segments are also seeing spillover benefits.
“The Johor-Singapore Special Economic Zone (JS-SEZ) is expected to drive growth in the retail and entertainment sectors, supported by an influx of businesses and workers.
“DCs are one of the contributors to this broader SEZ-driven increase in footfall, alongside manufacturing and logistics activities.”
Tan added that DC-driven demand is further widening the divide between properties along the Johor Baru-Singapore Rapid Transit System (RTS) corridor and those outside it.
“Industrial properties near DCs, along with surrounding residential and retail areas, are pulling further ahead of assets located outside the corridor,” he said.
A market observer said DCs create jobs, attract engineers, technicians, managers and supporting workers, which can lift demand for nearby housing, particularly rental properties.
“This can benefit residential developers and landlords, thus spurring the residential market.”
For the commercial sector, he said employees and suppliers create demand for offices, retail, food and beverage outlets, convenience stores and other services.
“This can support commercial property values and occupancy.
“As for the retail and hospitality segments, a larger workforce and influx of contractors can support hotels, serviced apartments, restaurants, shopping centres and other amenities.”
As such, he said even land unsuitable for DCs can benefit, if it “sits near a major cluster”.
“Developers may acquire surrounding land for residential, commercial, logistics or mixed-use projects. Additionally, new DC clusters often require upgrades to roads, power infrastructure, water supply and telecommunications.
“This can improve connectivity and make surrounding land more attractive for other forms of development.”
An analyst, meanwhile, said DC investments can have a spillover effect on the construction sector.
“Beyond the initial construction phase, DCs generate demand for security, cleaning, facilities management, engineering, maintenance and other specialised services.”
He added that the logistics and warehousing segments, more often than not, will also benefit.
