By Aaditya GovindRao and Roushni Nair
(Reuters) – Goodman Group’s inventory has been on a scorching streak this 12 months, shining brilliant amongst its Australian real-estate friends as the substitute intelligence growth has pushed a frenzied demand for knowledge centres.
World “hyperscalers”, or large-scale cloud service suppliers, resembling Amazon, Microsoft and Meta, have been spending billions on knowledge centres to cater to rising demand for AI providers.
Australia’s data-centre market, although nascent, noticed outsized funding this 12 months with Blackstone shopping for AirTrunk for A$24 billion ($14.91 billion) in September and developer NEXTDC elevating almost A$4.6 billion in fairness and debt.
Goodman, the nation’s greatest property developer, counts the world’s largest hyperscalers as its prospects, its web site says, however the firm didn’t affirm the identities of its prospects in response to Reuters.
Its stock, nonetheless, displays the heightened demand for these specialised services, with knowledge centres beneath building making up 42% of its A$12.8 billion ($7.96 billion) portfolio of tasks beneath improvement on the finish of September, up from 37% on the finish of final 12 months.
This has despatched its inventory flying 45.8% increased this 12 months, positioning Goodman for its finest efficiency since 2006. It is usually the Australian actual property index’s high performer.
Greater publicity to knowledge centres in improvement makes the market extra comfy paying a better a number of for the enterprise, mentioned John Lockton, head of funding technique at Sandstone Insights.
“Investments into knowledge centres proceed to see momentum … We anticipate this atmosphere to proceed to help Goodman – CAPEX outlook for hyperscalers implies ongoing progress for FY25.”
The consensus is cut up on whether or not Goodman’s inventory rise can proceed. Some factions of the market highlighted that investor curiosity in data-centre-focused shares has begun to chill as valuations get wealthy.
They drew warning from landlord DigiCo Infrastructure REIT’s preliminary public providing this month, the place it raised A$2 billion, however the inventory fell 9% on debut.
“We predict Goodman’s securities are costly at present costs … we’re extra cautious about assuming maintainable extra returns from DC funding in the long term,” mentioned Winky Yingqi Tan, a Morningstar analyst centered on REITs.
Tan additionally flagged dangers of data-centre obsolescence resulting in capital-intensive upgrades, and rivals including extra provide, as elements that would erode Goodman’s returns over time.
Lockton, nonetheless, stays upbeat on Goodman’s prospects. He lauds its current pipeline, and entry to land with energy provide that may be transformed to knowledge centres, which rivals have flagged as tough to acquire.
