Australia is fast becoming a hotspot for data centre investment – driven not only by the rise of AI and cloud but also by structural advantages unique to the local market.
A new CBRE report, Why Australia for Data Centres, outlines the factors that set the country apart from its Asia-Pacific competitors.
CBRE’s Head of Industrial & Logistics and Data Centre Research Australia, Sass Jalili, said global backers are being drawn by three critical pillars: a secure energy grid, a robust regulatory framework, and a stable political environment.
Secure Energy Grid: Powering Continuous Growth
The CBRE report identifies Australia’s reliable energy grid as one of the nation’s strongest attractions for international capital.
Data centres are energy-intensive, requiring constant power to support AI workloads, hyperscale cloud services, and colocation customers.
Australia’s resilient infrastructure allows facilities to operate 24/7 without disruption.
This consistency reduces operational risk and helps contain costs, giving Australia an edge over regional markets where energy supply can be volatile.
Robust Regulatory Framework: Certainty in Development
Australia’s governance structure provides investors with rare long-term clarity.
Ms Jalili said this stability is delivered through three key mechanisms.
“First, the country maintains a stable legal and political environment, underpinned by strong property rights and transparent planning systems, which give investors confidence over multi-decade horizons,” she said.
Alignment across energy, telecommunications, and construction also limits the risk of sudden policy reversals.
“Finally, Australia’s compliance with global data standards, including security and privacy regimes, reassures both hyperscalers and enterprise operators that the local environment supports long-term operational continuity,” she said.
This predictability allows projects to be planned years in advance and scaled with confidence, reducing the likelihood of unforeseen costs or delays.
Stable Political Environment: Lower Risk, Higher Returns
Political predictability adds another layer of assurance.
“Australia’s political stability is one of its greatest differentiators in the APAC data centre landscape,” Ms Jalili said.
“Australia offers consistent, rules-based governance and strong institutional frameworks.”
That governance reduces sovereign and regulatory risk, enabling cashflows and returns to be modelled with greater certainty.
“In practical terms, that stability translates to lower perceived risk premiums on capital and a willingness by both global hyperscalers and infrastructure funds to commit to multi-billion-dollar development pipelines,” she said.
“Australia’s predictability enhances investor confidence and positions the country as a safe harbour for long-term digital infrastructure investment.”
Tightening Supply: Shortfalls Ahead
CBRE warns demand is moving even faster than supply, forecasting that Australia will face a shortage of AI-ready data centre space within the next two to three years.
Capacity is expected to rise from 1.4 GW in 2025 to 1.8 GW by 2028; however, demand is projected to outstrip that by up to 1.7 GW.
Other obstacles threaten to slow delivery.
“Australia’s main hurdles for new data centre development are power availability, lengthy planning processes, and high construction costs,” Jalili said.
Strong Pipeline for Long-Term Growth
Despite these headwinds, Australia’s investible data centre market is projected to expand by 50% over the next four years to around A$46 billion.
Future momentum will continue to be led by hyperscalers, AI-driven workloads and enterprise cloud adoption.
“Sydney and Melbourne will remain the primary hubs, but growth will increasingly extend to secondary markets like Perth, Brisbane, and Canberra as operators diversify site selection around power and land availability,” she said.
“Over the coming years, we anticipate multi-billion-dollar investment pipelines, with national capacity set to almost double as Australia cements its role as a Tier-1 digital infrastructure market in APAC.”
