The past few years have seen investors clamber for a slice of the warehousing space as demand soared from companies wanting big sheds to pack and ship online orders. That investment trend has now arguably played out, with properties becoming expensive to buy and thus lowering the returns for investors.
Data centres could be the next big thing in the world of real estate, particularly as the lockdown has shown the importance of having access to systems outside of the office.
Speaking in the latest episode of Shares/AJ Bell’s Money & Markets podcast, Tom Walker from Schroders says data centres are ‘the new beachfront property’ because they are now ‘more valuable than that lovely house with a great view of the beach’.
Walker says 10% of his fund’s portfolio is in data centres ‘which is really where the cloud lives’. He adds: ‘We are effectively the landlord to the cloud.’
On the podcast, Walker explains demand is likely to increase for companies and streaming providers to have space in data centres.
‘The last thing we want to be doing is investing in a company that is just buying (data centres) because you will find you may not get a good total return. There is a select group of very well-run companies that own, develop and manage these data centres and they have a strong early mover advantage.’
