Goodman Group's Data Centre Bet Wins Over Fund Managers, One Lease at a Time

Skepticism about unconverted potential gave way to conviction as joint ventures, leases and a strong FY26 result landed through the year.

14 Oct 2026 · 4 min read

Goodman Group has quietly turned itself into one of the ASX's clearest AI infrastructure plays, and its FY26 result confirmed just how far that shift has gone: 78 percent of its development book is now data centres, up from 57 percent a year earlier, backed by a global power bank of 6.4 gigawatts across 16 cities. Fund managers spent 2026 moving from skepticism about whether that pipeline would ever convert into signed tenants, to a wobble over whether the AI capital spending cycle can sustain it, to what several now call the highest-quality industrial and data centre portfolio on the market.

From industrial landlord to data centre power play

Yarra Capital Management described Goodman in March as an industrial property owner, developer and manager increasingly exposed to data centres, and the thesis fund managers keep returning to is that power, not land, has become the scarce resource. Perpetual Asset Management argued the group's power bank creates a durable competitive moat that is difficult and time-consuming for rivals to replicate, making Goodman a preferred development partner for hyperscalers seeking delivery certainty at scale. Blackwattle Investment Partners made the same point with a number attached, noting grid connections in major markets can take five to seven years to establish, which hands a major advantage to a landlord that has already secured its power access.

The market wanted proof, not just potential

That thesis was not universally accepted early in the year. Yarra Capital held an underweight position in March after the stock weakened on its half-year accounts, arguing that although FY26 earnings guidance was reaffirmed, investors were disappointed the strong power bank and partnership progress had not yet translated into firm data centre customer commitments. Paradice Investment Management held a similar underweight as the stock underperformed in a broader risk-off shift, and Sage Capital noted long positions in Goodman were among its worst performers as the shares fell 12 percent. Quest Asset Partners took the opposite approach, using that market-wide correction to add to its Goodman holding alongside other names positioned to benefit from the AI rollout and data centre demand.

Proof arrives: joint ventures, leases and a strong result

Evidence began landing in April, when Perpetual Asset Management reported the stock returned 15.8 percent for the month after Goodman announced a joint venture with Databank for its LAX01 development in California, removing market concerns about the lack of a capital partner and tenant and sending the shares up 7 percent on the news alone. The mood cooled again in July, when Blackwattle Investment Partners noted the stock fell 4.4 percent as investors grew more wary about the capital intensity of the AI data centre transition and questioned how conservative the reaffirmed 9 percent operating earnings growth target really was, even as the fund maintained its view that Goodman's measured development strategy and power bank moat remained intact.

August's FY26 result answered many of those questions. Pendal Group described a result broadly in line with expectations, with operating profit up 15.7 percent and operating earnings per share up 10.1 percent, backed by a strong balance sheet carrying 6.5 percent gearing and $6.4 billion of liquidity. FY27 guidance of 9 percent operating EPS growth was seen as solid, an 18 percent decline in management earnings was viewed as temporary, and Pendal highlighted a proposed Australian Data Centre Partnership, due in the first half of FY27, as a potential catalyst, alongside development margins it called attractive at a 9.2 percent yield on cost against a 5.0 percent portfolio capitalisation rate. Tamim Funds Management put the scale of the pivot in its own words, noting the $19.7 billion development book and quoting Goodman chief executive Greg Goodman's framing of the real constraint on growth.

Scarcity of power and land is what limits AI and cloud growth, not enthusiasm.

— Greg Goodman, quoted by Tamim Funds Management, Stock Insight, August 2026

By September, Solaris Investment Management called Goodman a standout buy after the company signed a lease on a key data centre development in Japan, which it expects to be the first of several such leases over the next twelve months, describing the portfolio as one of the highest quality industrial holdings globally and one increasingly being transformed into data centre infrastructure to meet surging global demand.

What fund managers are watching next is largely a question of conversion: whether the proposed Australian Data Centre Partnership materialises as the catalyst Pendal expects, whether more signed leases like the one in Japan follow at the pace Solaris anticipates, and whether the broader AI infrastructure capital spending cycle that Blackwattle flagged concerns about in July continues to support the economics behind Goodman's 9.2 percent development yields.