According to a research report released by China Securities Co., Ltd. (also known as CSC Financial), artificial intelligence is driving a comprehensive transformation of data centers toward AI Data Centers (AIDC). The national average rack utilization rate stands at 56.7%, yet structural divergence is pronounced 鈥?high-power racks in core regions exceed 80% utilization, while low-power traditional racks face oversupply risks, and high-quality assets remain in short supply. The market share of third-party operators has climbed to 43.1%, with third-party customized colocation and self-build becoming the primary sources of industry growth. China's data center REITs remain in their early stages, leaving vast room for expansion compared to overseas markets. The two listed products are located in core hubs, with operations steadily improving, high utilization rates, a 100% collection rate, and strong cash flow certainty. On the expansion front, the first batch of REITs has already initiated follow-on offerings 鈥?Runze plans to inject assets from the same park, Vanke's VNET pursues cross-regional expansion into Langfang, Jiangtian Data has received recommendation from the National Development and Reform Commission (NDRC), and Aofei and Zhengtong are poised to follow. The recommendation is to focus on projects characterized by "superior location, stable operations, reasonable valuation, and growth potential."
The main viewpoints of China Securities Co., Ltd. are as follows:
Scale Growth Hits a New Stage High, with High-Density and Green Development Evolving in Parallel
Data center supply scale achieved a CAGR of 20.1% from 2021 to 2025, and high-density racks have become the primary direction for new construction and renovation. Driven by AI, IDC is undergoing a comprehensive transformation toward AIDC. On the policy front, the "Eastern Data, Western Computing" initiative and energy consumption red lines continue to tighten, requiring newly built or renovated large data centers to reduce PUE to below 1.25 and for hub nodes to achieve green power proportion exceeding 80%. On the demand side, the number of racks reached 13.73 million by the end of 2025, with intelligent computing power achieving a CAGR of 60.4% from 2020 to 2024, indicating sustained expansion of computing demand. On the supply side, the national average rack utilization rate is only 56.7%, but structural divergence is evident 鈥?high-power racks in core areas exceed 80% utilization, while low-power traditional racks face relative oversupply, and quality assets remain in short supply.
Intensifying Industry Competition: Customized Colocation to Become the Primary Incremental Business Model in the Computing Era
Third-party IDC providers center on rack colocation, with long contract terms, high-quality customer resources, energy consumption quotas, and customized construction and development capabilities forming barriers to entry. AIDC power density has significantly increased, driving supply concentration toward two paths: customized wholesale and ultra-large-scale self-build, with power acquisition and energy efficiency control becoming core competitive barriers. In terms of competitive landscape, telecom operators, third-party IDC providers, cloud vendors, and local state-owned capital each possess distinct advantages. The market share of third-party operators rose from 39.3% in 2021 to 43.1% in 2023, showing a continuous upward trend. In overseas markets, three differentiated platform types have emerged: retail interconnection, wholesale development, and mature asset holding.
Data Center REITs Have Huge Development Space, Operations Are Steadily Improving, and Expansion Is Poised for Takeoff
From an international comparison perspective, China's data center REITs have enormous room for growth. The seven representative REITs across China, the United States, and Singapore show significant divergence in scale and distribution rates, with China's distribution rate level falling between that of the US and Singapore. The two listed data center projects are both located in core hubs, with operations steadily improving. Looking ahead, the first batch of REITs has already initiated a follow-on offering race 鈥?Runze plans to expand with assets from the same park, Vanke's VNET plans cross-regional injection into Langfang, and sector expansion is imminent. Jiangtian Data has received NDRC recommendation, while Aofei, Zhengtong, and other projects are poised for action. Pre-REITs and inter-institutional REITs and other diversified capital tools are being advanced simultaneously.
Investment Recommendation: Focus on Projects with "Superior Location, Stable Operations, Reasonable Valuation, and Growth Potential"
Data center REITs are publicly offered infrastructure funds that use mature IDC assets as underlying assets and distribute stable cash flows to investors. The research framework should be developed along four main lines: "asset quality 鈥?operational stability 鈥?valuation reasonableness 鈥?expansion growth potential." Asset quality examines location, PUE, and power capacity; operational stability examines billing rate/utilization rate, tenant concentration, and remaining contract terms; valuation reasonableness examines income approach discount rates, CapRate, and distribution rates; and expansion growth potential examines asset reserves and approval progress. Because some wholesale projects adopt a "power-not-included" model where electricity costs do not enter the profit and loss statement, gross margin/EBITDA margin figures cannot be directly compared horizontally with power-included calculations.
Focus on projects with "superior location, stable operations, reasonable valuation, and growth potential," prioritizing assets near first-tier cities or national hub nodes. Under the dual constraints of low-latency demand and energy consumption quotas, the scarcity of core locations continues to strengthen, building long-term safety margins. Utilization rate 鈮?0%, primary tenants being high-credit entities such as telecom operators, remaining contract terms 鈮? years, and collection rate maintained at 100% ensure highly certain cash flows. Reasonable valuation means the income approach discount rate matches asset risk, the distribution rate offers sufficient spread relative to the risk-free rate, and P/NAV is in a reasonable range around 1.0x. Growth potential means the sponsor has ample asset reserves, follow-on offerings are reasonably priced and can achieve distribution rate accretion, and there is capability for power density upgrades to adapt to the evolution of AI computing demand.
Risk Warnings
1. Risk of continuously tightening energy consumption and PUE policies. Energy efficiency standards for new and existing data centers are constantly rising, which may increase renovation costs or restrict the operation of some high-PUE assets. If local requirements for energy consumption, green power, and carbon emissions are further strengthened, projects may face shutdowns for renovation and rising compliance costs.
2. Risk of overall REITs market liquidity and valuation correction. Since 2026, the sector has generally weakened. If market style continues to shift, products with previously high premiums still face valuation digestion pressure. Combined with the narrowing spread between risk-free rates and distribution rates, secondary price volatility and redemption pressure may intensify.
3. Risk that expansion asset injection falls short of expectations. There is uncertainty regarding the approval progress of reserve assets, the consideration level, and the distribution rate accretion effect after injection. If the approval pace, issuance window, or asset operations fall short of expectations, scale expansion and distribution accretion may slow down.
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