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Australia Poised to Lead Asia-Pacific Data Centre Expansion Amid AI Growth Surge
Australia is set to lead Asia-Pacific data centre growth with $6.7B invested in 2023. AI workloads and data sovereignty drive demand for high-density, energy-efficient facilities.
Australia Positioned to Lead Data Centre Growth in Asia-Pacific
The Asia-Pacific region is set to dominate global data centre investment in 2024, attracting US$15.5 billion, highlighting its increasing strategic importance. Australia ranks just behind the United States, with $6.7 billion invested last year. This momentum is expected to continue, driven by a surge in AI workloads and ongoing digital transformation initiatives.
Dominic Storey, operations manager at Acclario, notes that Australia's investment figures reflect a clear trend. The rise of AI and the critical need for data sovereignty are major factors fueling this growth.
The AI Chip Edge
Australia holds a distinct advantage in the AI sector as one of only four nations in the region exempt from export restrictions on AI chips. This exemption is attracting increased investment in data centre infrastructure. However, businesses must remain mindful of differing regulatory frameworks and ongoing US export controls affecting AI chip availability.
Storey emphasizes the importance of access to leading AI chipsets, stating that without them, investment costs and timelines would likely increase significantly.
As AI workloads demand greater computational power, cloud service providers are expanding infrastructure to meet evolving needs. Michael Vincetic, leader of cloud and core enterprise at Kyndryl Australia and New Zealand, points out two main trends: the move to hybrid IT environments and stricter data localisation requirements.
Many organisations will continue to operate critical workloads on-premises due to compliance or complexity concerns. This means investments are not limited to cloud solutions but also include rethinking on-premises strategies to ensure consistent, scalable, and secure service delivery.
Implications for Real Estate and Construction
AI workloads require significantly more power, pushing rack densities from 30-40kW to over 80kW. This shift is driving a move toward ultra-high-density data centre deployments, reshaping Australia's urban data centre landscape. Facilities offering energy-efficient design, strategic locations, and long-term power agreements will be in high demand.
Stephen Beard, global head of data centres at Knight Frank, explains that hyperscalers and colocation providers are focusing on markets with reliable power, strong connectivity, and favourable regulatory conditions.
Melbourne is emerging as a key data centre hub, challenging Sydney’s traditional dominance due to increasing land scarcity and power constraints in the latter. Perth is also gaining attention, and momentum is expected to spread across all Australian capital cities.
Storey highlights Australia's abundance of land as a competitive advantage and expresses interest in further development and partnerships in Brisbane.
Broader Industry Impact
Local industries will benefit from the influx of investment in data centre infrastructure. Improved development approvals, upgrades to power distribution, and demand for ancillary services will drive growth in sectors such as technology, IT services, real estate, construction, and energy technologies focused on sustainability.
Storey points to opportunities for companies involved in networking, data management, cybersecurity, and construction to support this infrastructure expansion.
The government also has a key role in accelerating growth by streamlining approvals related to building and environmental regulations, offering incentives for AI investments, collaborating with energy providers to upgrade power grids, and contributing to a national strategy for AI infrastructure development.
For professionals in real estate and construction, understanding these trends is crucial. The data centre market’s growth signals increased demand for land, specialised construction, and energy-efficient design — areas ripe for strategic investment and development.