Secure grid and stable regulation spur Australian data centre market
Rapid AI adoption, along with hyperscale cloud growth and facility upgrades, is driving increased data centre demand in Australia, which remains one of the most attractive data centre markets for investors globally, new research from CBRE shows.
The Why Australia for Data Centres report found Australia’s secure energy grid, robust regulatory framework and stable political environment provide investors with long-term certainty in an increasingly competitive Asia Pacific landscape.
CBRE’s head of industrial & logistics and data centre research Australia Sass Jalili said Australia’s investment appeal is underpinned by yield stability, long lease terms, and strong credit covenants, which together deliver attractive risk-adjusted returns.
CBRE forecasts Australia’s live data centre capacity will increase from approximately 1.4GW in 2025 to around 1.8GW within three years. However, this still falls short of projected demand, resulting in an estimated supply gap of 0.7 to 1.7GW by 2028.
Major challenges for data centre growth and development include elevated construction costs, tightening site availability and access to adequate power supply. Jalili added the uptake of AI is driving a new phase of data centre growth in what is already a rapidly evolving sector.
“Australia’s data centre sector has undergone significant transformation in recent years, evolving from what was once considered a niche infrastructure play to a highly sought-after real estate asset at the forefront of tech innovation,” Jalili said.
“Australia combines rising AI-driven demand, resilient pricing, and a globally competitive cost base, making it one of the most attractive markets for data centre investment. Sydney and Melbourne have emerged as core hubs within the Asia Pacific network, attracting both domestic and offshore capital,” Jalili added.
Based on the pipeline of committed projects, CBRE forecasts Australia’s “investible universe for data centres” will grow by around 50% in the next four years to total circa A$46 billion.
Experts said the rise in AI in Australia had led to the emergence of a fast-growing class of ‘NeoCloud’ customers who are beginning to drive colocation demand. NeoCloud are AI-native and digital-native companies, like OpenAI and Zoom, that scale rapidly but lease large blocks of colocation capacity rather than building their own hyperscale campuses.
The Why Australia for Data Centres report found Australia’s secure energy grid, robust regulatory framework and stable political environment provide investors with long-term certainty in an increasingly competitive Asia Pacific landscape.
CBRE’s head of industrial & logistics and data centre research Australia Sass Jalili said Australia’s investment appeal is underpinned by yield stability, long lease terms, and strong credit covenants, which together deliver attractive risk-adjusted returns.
CBRE forecasts Australia’s live data centre capacity will increase from approximately 1.4GW in 2025 to around 1.8GW within three years. However, this still falls short of projected demand, resulting in an estimated supply gap of 0.7 to 1.7GW by 2028.
Major challenges for data centre growth and development include elevated construction costs, tightening site availability and access to adequate power supply. Jalili added the uptake of AI is driving a new phase of data centre growth in what is already a rapidly evolving sector.
“Australia’s data centre sector has undergone significant transformation in recent years, evolving from what was once considered a niche infrastructure play to a highly sought-after real estate asset at the forefront of tech innovation,” Jalili said.
“Australia combines rising AI-driven demand, resilient pricing, and a globally competitive cost base, making it one of the most attractive markets for data centre investment. Sydney and Melbourne have emerged as core hubs within the Asia Pacific network, attracting both domestic and offshore capital,” Jalili added.
Based on the pipeline of committed projects, CBRE forecasts Australia’s “investible universe for data centres” will grow by around 50% in the next four years to total circa A$46 billion.
Experts said the rise in AI in Australia had led to the emergence of a fast-growing class of ‘NeoCloud’ customers who are beginning to drive colocation demand. NeoCloud are AI-native and digital-native companies, like OpenAI and Zoom, that scale rapidly but lease large blocks of colocation capacity rather than building their own hyperscale campuses.
