Over the past five years, Australia’s data centre market has exploded. It is now home to 314 facilities, boasting over 1GW of installed capacity, and operating at a staggering 85–90% utilisation.
But behind this success lies mounting pressure:
• AI is rewriting the rules of infrastructure adaptability
• Operational costs are climbing
• Dependence on conventional energy persists
• Land for expansion is increasingly scarce
To understand what’s next, Alvarez & Marsal and Future Place engaged 100 data centre senior executives, service providers, and decision-makers shaping the sector’s trajectory.
Their insights reveal the priorities, challenges, and opportunities that will define whether ANZ can power the digital future and remain globally competitive.
Key Survey Highlights
1. Investment Surge Expected in ANZ
Investors surveyed are planning significant capital commitments, with over 60% intending to invest more than AUD 100 million in the next three years. Greenfield projects and AI-ready infrastructure are key focus areas, reflecting confidence in the region’s growth potential.
2. Hyperscalers Will Lead Demand Growth
56% of attendees believe hyperscalers will drive the most demand for data centres over the next five years, followed by ICT and defence sectors. This reflects the growing dominance of cloud providers and large-scale digital infrastructure needs.
3. AI-Specific Data Centres Will Significantly Expand, Accelerating GPUaaS
A new UN Trade and Development (UNCTAD) report projects the global AI market will soar from $189 billion in 2023 to $4.8 trillion by 2033 — a 25-fold increase in just a decade.
It should come as no surprise then that AI-specific data centres are a top investment focus (45% of voting) and, as a consequence, GPU-as-a-Service (GPUaaS) is emerging as a fast-growing market. This trend is driven by the increasing demand for high-density computing and advanced GPUs.
4. Secondary Cities Will Emerge as Growth Hotspots
Today, only 10% of Australia’s data centre capacity sits in secondary markets, far behind the US (30%) and Europe (25%). That’s about to change.
Executives identified regional NSW, Brisbane, and Perth as emerging hotspots, driven by greater land availability, lower costs, and proximity to end users for reduced latency.
And it’s not just Australia. New Zealand is stepping into the spotlight, leveraging renewable energy access and geographic advantages to attract investment.
5. The Energy Mix Will — and Must — Change
When we sampled the operators in the audience, the survey found that just 16 respondents reported renewable energy usage between 10–20%, while 12 indicated usage below 10%. These figures highlight the industry’s reliance on traditional energy sources, with renewable adoption still in its early stages.
Looking ahead, however, 25 operators anticipate that 20–50% of their energy usage will come from renewables by 2028.
This anticipated increase is just one piece of the sustainability puzzle. Another critical factor is how operators manage cooling demands as rack densities rise.
Cooling systems — often water-intensive — pose a growing sustainability challenge. It’s no surprise that many participants ranked cooling solutions as the second-largest area of future capital expenditure, behind AI service offerings.
But Roadblocks Remain
Despite strong growth themes, scaling remains a major challenge — and it’s getting tougher every day.
Power Supply
The most critical issue? Power supply limitations. Over 75% of attendees agreed this is the single biggest barrier to future expansion, underscoring the urgent need for further energy infrastructure investment.
The Transition to Renewables
Energy transition comes with its own set of challenges, and energy strategy is now central to investment decisions. Energy autonomy and sustainability — through onsite, behind-the-meter generation, green PPAs, and locations within Renewable Energy Zones — are becoming critical differentiators for data centres competing for hyperscale tenants, enterprise clients, and capital.
The challenge is clear, but so is the opportunity to innovate. Without it, sustainability and competitiveness are at risk — which is why many expect to double their investment in this space.
Capex Control Is Key to Investment Viability
Australia is now one of the most expensive markets in the Asia-Pacific region for data centre construction, with costs reaching USD 9.6 million per megawatt in 2024.
As construction costs rise and power densities increase, maintaining strict capital discipline is becoming essential. While build costs in Sydney and Auckland are around the global average, lower-cost Southeast Asian markets such as Malaysia enjoy more favourable regulatory environments and targeted incentives.
For Australia to lead in an AI-driven future, a coordinated effort is required from government, developers, operators, and every part of the data centre value chain.
Sustaining investment viability will depend on deploying high-impact capex management strategies, driving smarter builds, efficient procurement, and value-driven design from day one.
The Bottom Line
The decisions made today will determine whether ANZ’s data centre ecosystem can keep pace with AI-driven digital transformation and secure its role as a global leader in infrastructure innovation.
The question isn’t if the industry will evolve — it’s how fast and how smart.
