Knight Frank has published its latest Global Data Centres Report, projecting market growth at a compound annual growth rate (CAGR) of 18 per cent over the next five years, with the market expected to reach US$4 trillion by 2030.
The Knight Frank report found Australia’s data centre market has gained significant momentum following the recent U.S. ruling that grants the country privileged access to Nvidia AI chips.
As one of only four nations in APAC exempt from any export restrictions, Australia now holds a strategic advantage in the AI race, attracting increased investment from hyperscalers and enterprises looking to deploy next-generation infrastructure. With restrictions tightening in other APAC regions, Melbourne is emerging as a key location for AI-driven data centre growth.
Traditionally viewed as a secondary market to Sydney, Melbourne is rising as a key data centre hub as power availability becomes increasingly difficult in Sydney and land scarcity intensifies. The state of Victoria is also taking a more proactive approach to approving data centre applications versus New South Wales.
Hyperscalers and colocation providers are accelerating large-scale investments in Melbourne, tapping into its growing AI and cloud demand to establish high performance computing infrastructure.
A major shift towards ultra-high-density deployments is now redefining the city’s datacentre landscape. AI workloads require significantly more power, pushing rack densities from 30-40kW to over 80kW. This has intensified competition for high-density-ready colocation space, with operators racing to integrate liquid cooling and power distribution upgrades.
As AI adoption continues to reshape infrastructure needs, Melbourne is rapidly transforming into a critical destination for next generation digital infrastructure in APAC.
Knight Frank Head of Industrial Investments Angus Klem said buyer demand for data centres was only strengthening in Australia.
“The purchase of AirTrunk, which develops and operates large-scale data centre campuses across the Asia-Pacific region, by Blackstone and the Canada Pension Plan Investment Board last year, was the largest data centre transaction globally in 2024,” he said.
“It cemented data centres as a major growth sector for Australia, and momentum has only been building since then.
“We have seen strong investment from overseas investors, with Australia the second top investment location globally for data centres last year. However, we are also seeing domestic buyers doing the ground work and readying themselves to invest, and with capital competing for opportunities, we will continue to see rapid growth in the data centre space.
“Sydney has seen significant activity in the data centre space, and while the focus now looks to be turning to Melbourne, we are also seeing Perth gain more traction and over the coming years, the momentum in the data centres sector will flow through to every Australian capital city.”