The rapid growth and investment in data centre infrastructure is not an area of business that real estate investment trusts (Reits) can participate in as a typical commercial landlord.
Redefine COO Leon Kok told Business Day that as data centre companies tend to own and operate their facilities, the opportunity for Reits is mainly confined to selling land for development.
Data centres — typically specialised facilities that manage IT infrastructure, including servers, storage devices and network equipment — and related digital structures have become attractive investment targets for asset managers. The businesses are generally backed by long-term customer contracts, ensuring stable, predictable revenue and cash flow.
“We certainly have seen an increase in demand from data centres for space. However, our experience is that the operators typically prefer to own their sites, given the large technology investment within the building,” said Kok.
That does not “lend itself nicely to a typical arrangement where the landlord would invest in the outer shell and the land and the operator would just operate it”, he said.
“Given the large capital commitment, the experience has been that the data centre operators prefer to buy the land as opposed to signing long-term leases.”
Growth in the sector has been underpinned by the advent of cloud computing over the past decade and a half, which is benefiting from the demand created by the AI boom.
Major data centre providers expanding locally include Teraco, Vantage Data Centers, Open Access Data Centres, and Equinix, alongside cloud hyperscale operators such as Amazon Web Services, Google and Microsoft Azure.
Kok said another limiting factor is that data centres require much reliable bulk electricity supplies, and few sites in the country are suitable.
“That’s why you wouldn’t necessarily see a proliferation of data centres all over the place, because they are dependent on that large bulk supply of electricity.”
That is not to say Redefine does not trade or engage with data centre providers at all.
“We have concluded a number of transactions with data centre operators, but that was … selling land to them for them to develop and manage themselves,” said Kok.
Huge potential
Still, the sector’s investment potential is huge. In his 2026 state of the nation address, President Cyril Ramaphosa signalled his bullishness in that regard, saying the government would push for more investment in data centre infrastructure, including foreign investment as part of the funding mix.
“We are attracting major investment in digital infrastructure, with 55 data centres already built and more than R50bn of investment expected over the next three years,” Ramaphosa said at the time.
Billions of rand have been ploughed into these facilities in recent years.
In July 2025, US payments giant Visa opened its first data centre in Africa as part of a R1bn investment over the next three years in South Africa.
In October 2024, US data centre operator Equinix opened a R3bn facility east of Johannesburg, its first in South Africa.
In 2022, US-based Vantage Data Centers opened its first South African unit in the Waterfall precinct as part of a more than R16bn investment in the country.
In 2021, Teraco said it would spend R6bn over the next four years to expand its capacity in Johannesburg, Cape Town, and Durban. The company, majority owned by New York-listed Digital Realty, has undertaken aggressive expansion in recent years.
Data sovereignty — the principle that digital data is subject to laws and regulations of the country where it is collected, stored or processed — is expected to keep investment flowing into the sector.
The issue has grown in importance alongside the growth of cloud computing, where data is processed in large data centres that are often far away from an organisation and often in other countries.
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