This article is from the Australian Property Journal archive
THE Australian investable universe for data centres is set to almost double to $40 billion over the coming four years, driven by hyperscalers and the hasty adoption of generative AI.
According to CBRE’s Australia’s Data Centres 2024 report, by 2028 the investable universe for the sector will grow from the current $23 billion to $40 million.
“Demand for data centres in Australia is increasing exponentially, key drivers for this are greater data generation and storage needs, growing adoption of cloud computing services, and advancements in technology, particularly the adoption of AI,” said Sass Jalili, head of data centre research at CBRE.
“Several global data centre operators have a presence in Australia, and their built-out capacity (megawatts), has been growing over the past decade. Both large and small players have expanded their server networks and upgraded data storage service facilities to meet rising demand for the industry’s services.”
Australia is ranked fifth globally and the second within the Asia Pacific region for built-out capacity. With the Asia Pacific data centre market recording 1.3GW boost in capacity over the first six months of 2024, led by Sydney.
There is almost to 1,500MW (1.5 GW) of built-out capacity across Australia currently, with the hotspots for large centres in Sydney at 60% of the national total and Melbourne, where capacity is set to more than double over the next five years.
“Insatiable demand from major occupiers for data centre consumption, especially in the cloud and AI sectors, has driven the growth of the asset class,” said Darcy Frawley, Pacific data centres capital markets director at CBRE.
“Occupiers are now competing aggressively to increase their data centre footprint to accommodate future business needs. Australia specifically is set to see a large gap between capacity and demand in the medium term, which will lead to significant rental growth and make the sector even more appealing for data centre investors.”
Data centre is currently competing with the industrial and logistics sector for land, with the scale of land needed for data centres growing from 1.3-hectares in 2018 to 15.7-hectares in 2024.
While CBRE’s Q1 Asia Pacific Data Centre Trends report found new Australian data centre supply is now fully contracted, due largely to rapid cloud adoption and AI demand.
