Executive Summary

The Australian data centre boom is far from reaching its zenith. With a large supply gap, the market remains one of the most attractive destinations for global infrastructure capital, provided that the physical and regulatory constraints of power and land can be navigated through strategic collaboration between industry and government.

The Australian data centre market is moving toward a state of “structural scarcity” where the availability of power and high-density cooling will define market leadership. Operators are increasingly differentiating themselves based on their “power-bank” security and their ability to host the 50 kW+ racks required for modern AI training and inference.

Top-Level Growth Forecasts

Our market forecast reveals massive, sustained expansion driven heavily by hyperscale demand:

• Capacity Growth: Total deployable capacity in Australia (including internal hyperscale capacity) is forecast to grow from 1,428MW in FY25 to 3,176MW in FY30, representing a Compound Annual Growth Rate (CAGR) of 17.3%.
• Hyperscale Dominance: Hyperscale volume (both external and internal) already constitutes more than half of deployable capacity as of FY25, a trend that will continue to accelerate as public cloud and AI workloads expand.
• Revenue & Pricing: Data centre lease revenue is projected to rise at a 20.5% CAGR across the forecast period. Due to supply constraints and high current occupancy rates, segment prices are expected to grow by approximately 6% out to FY30, but the growing share of lower-priced hyperscale capacity means that blended price growth is around 3%.
• Geographic Shifts: While Sydney currently dominates with a 58% share of national deployable capacity, upcoming mega-projects in Melbourne are growing its share, principally at the expense of Canberra. Growth is also occurring in Brisbane, Adelaide, Perth and even Darwin, but the South-East corner of the country will continue to dominate.

Our definition of “capacity” is deployable capacity that is already in the market, i.e. capacity that is either in use or ready to deploy on a timescale of weeks. Other capacity forecasts in the market may use more expansive definitions, the most common being “critical load” (or “IT load”), the power available for IT equipment (whether actually used or not). However, our definition allows us to calculate forecast revenues based on unit prices. 

Key market drivers

The surge in investment is underpinned by several primary catalysts:

• The Artificial Intelligence (AI) Boom: A global requirement for AI model training and inference is fundamentally altering technical requirements. Rack densities are being pushed from a standard 5-10 kW to beyond 20 kW, and over 100 kW for specialised GPU clusters.
• NeoCloud and Hyperscale Lease Cycle: A new class of tenants, termed “NeoCloud” operators has emerged. Unlike traditional enterprises that might take 1 MW to 5 MW over several years, NeoCloud tenants are absorbing blocks of 10 MW to 50 MW at very short notice, driving demand pressure
• Data Sovereignty: The Australian Government’s Hosting Certification Framework and the 2023–2030 Cyber Security Strategy have created a protective perimeter around sensitive government and defense workloads that require local capacity investment.
• Subsea Connectivity: Subsea cable connectivity is the silent backbone of Australia’s digital hub status, providing the necessary low-latency links to Asian and North American markets while bypassing the contended South China Sea.

Despite robust drivers, the expansion of the data centre market faces several structural bottlenecks:

• Power and Interconnection Lags: Reliable access to high-voltage electricity has replaced land as the primary limiting factor for data centre expansion. Data centres already account for approximately 5% of Australia’s electricity consumption, and pressure is growing on State and Federal governments to manage the impact.
• Sustainability, Water, and Social License: The environmental footprint of data centres has become a matter of public and regulatory concern, particularly over the water consumption of traditional cooling systems. This makes water-efficient technologies essential for long-term operations.
• Construction Costs & Talent Shortages: Infrastructure Australia identifies a potential peak workforce shortage of 300,000 by 2027, with data-centre-specific roles – such as high-voltage electricians, network engineers, and information security professionals – experiencing acute shortfalls.