Rapid growth in Artificial Intelligence, cloud gaming and the metaverse will fuel demand for more data centre according to new CBRE forecasts. Image: Canva.
  • As more data-hungry programs are developed, demand for data centres is driven up
  • The latest CBRE Australian Data Centre Trends report reveals strong data centre supply in the pipeline
  • The demand for data centres as an asset class continues to be robust

Data centres across Australia’s major cities will be in high demand as more data-hungry programs are developed, according to new CBRE forecasts.

Author of the CBRE report, Australian Data Centre Trends, Bass Miller says there is considerable data centre supply in the pipeline.

The research estimates 183,000 square metres of data centre space is currently in the pipeline, with notable projects including the Microsoft Data Centre in Sydney’s Kemps Creek and Next DC’s M3 in West Footscray.

“A significant amount of new data centre supply will be added to Australia’s major cities in the near term, with Victoria accounting for close to three-quarters of the total capacity under construction,” says Miller. 

“New data centre capacity requirements are emerging from the rapid growth of cloud gaming and the metaverse, with AI also requiring more data, reliability, lower latency and proximity to end users.”

Bass Miller, CBRE

Although the data centre market in New South Wales is still the largest in Australia, according to CBRE’s report, there has been a significant surge in Victoria’s capacity, driven by the state’s rapidly expanding technology sector.

Attracting investment

The demand for data centres as an asset class continues to be robust, ranked as the second most favoured alternative sector for investment by respondents to CBRE’s 2023 Investor Intentions Survey.

The International Data Corporation (IDC) predicts worldwide revenue for artificial intelligence (AI) at US$154 billion in 2023. By 2026 it is projected to surpass US$300 billion. 

This represents a 27% compound annual growth rate, equating to more than four times the growth rate of total information technology (IT) spending over the same time period.

CBRE’s report emphasises that US$1.4 billion worth of data centres were traded across the Asia Pacific region in 2022.

Asia Pacific direct centre investment volume

Note: Entity transactions included. Source: RCA, CBRE Research, April 2023.

Among the Australian data centres recently changing hands is the Sydney data centre at Ultimo, leased to Optus ($56 million) and iseek’s reported purchase of data centre operator YourDC, which included two South Australian assets in Mitcham and Salisbury.

Data centres addressing carbon footprint

As more data centres appear in Australia’s capitals, concerns have been raised over their environmental impact.

CBRE Associate Director – Data Centres, Darcy Frawley highlights that operators are working to address climate concerns. 

“While there have been increased concerns over carbon emissions and power consumption demand, many large-scale data centre operators are turning to renewable energy in order to offset their carbon footprints,” he says.

“Some operators are also looking to immersion cooling techniques to cut power costs in response to environmental concerns, increasing energy prices and higher rack density requirements.”

You May Also Like

Australian building costs have continued to soar, but has your insurance cover kept pace?

MCG Quantity Surveyors analysis found underinsurance could cost homeowners over $100K to replace a property, with the issue even more profound in the commercial property sector.

When will Australian property prices fall? One major challenge continues to prop prices up

Property prices are up by over 35% across the country since Covid, and while not the same story in each city, that’s little solace to prospective buyers pulling their hair out.

A window of opportunity could be open for savvy Australian property investors, but time is ticking

One expert has noticed investors are on the move while there’s less competition and fewer buyers in the marketplace.

Why Aussie property buyers aren’t waiting for rate cuts anymore

A surge in home loans shows buyers aren’t waiting for interest rates to drop before taking the plunge.

Top Articles

PropertyGuru Asia Property Awards (Australia) returns for its 7th edition, including several brand new award ...

This year's awards include several brand new categories, with entries closing 2 August 2024.

Thinking of borrowing for a new home? We decode the home loan lingo and explore ...

We take a look at everything from principal and interest to rates and more.

A window of opportunity could be open for savvy Australian property investors, but time is ...

One expert has noticed investors are on the move while there's less competition and fewer buyers in the marketplace.