Sydney once again has proven to be a powerhouse in the APAC region, according to Cushman & Wakefield’s annual Global Data Centre Market Comparison report.
In the established markets category, Tokyo ranked third globally behind Virginia and Atlanta, with Mumbai placing seventh and Sydney ninth. Osaka ranked fourth in the Emerging markets category, with Hyderabad in eighth place and Bangkok in tenth.
Alex Moffatt, Cushman & Wakefield’s Australia Head – Data Centre Advisory Team and Director – Capital Markets – Alternative Investments said demand for data centres in Australia has grown.
“In terms of scale of the next phase of data centres being proposed for Australia, new facilities are 300MW whereas only a few years ago, 30MW was common.
“Looking overseas, the American experience is with data centres on a much larger scale again of 1GW+. Live capacity for the entire Australian market is approximately 1.2GW, that is the same capacity as some of the new proposed data centres in the USA for one single data centre.”
Applying these themes to Australia, where there is a requirement of 300MW, Mr Moffatt said capacity is difficult to source in the existing grid in Sydney, certainly inner Sydney.
“Western Sydney is the main data centre growth corridor for Sydney as it has the infrastructure and grid capacity coming online. Difficulty expanding in Sydney at scale has lead to the move down to Melbourne where it is more straightforward to access suitable land and significant electricity capacity in the hundreds of megawatts. Alternatively, within NSW, as it starts to become harder to find that land and power in Sydney, our clients are searching further out into areas like Wollongong, Newcastle and the Hunter Valley.”
While Sydney is forecast to remain the powerhouse market for Australia reaching 2GW by 2030, other cities are trying to get in on the action and AI is playing a key role.
According to JLL’s Data Centres 2024 Global Outlook, with growing demands for AI. data centre storage capacity is expected to grow from 10.1 zettabytes (ZB) in 2023 to 21 ZB in 2027, a five-year compound annual growth rate (CAGR) of 18.5 per cent.
Mr Moffat said as cloud demand continues and with AI demand rising, operators have sought to build out ever larger developments to satisfy hyperscale users.
“Over the past year, available electricity capacity has become the number one consideration for data centre operators as they conduct site selection. Countries such as Australia which have a pathway to significant additional electricity capacity from renewable sources such as wind, solar and hydroelectric have become prioritised.
“This demand for large acreages combined with electricity capacity have made Melbourne and Perth key cities for evaluation in the APAC market.”
“Perth (and WA) have significant electricity generation capacity and direct cable connections to Asia so provide a logical solution to servicing the rest of APAC.
“Our view is that it is only a matter of time before operators realise there is in excess of 5GW of renewable electricity coming online in WA and a direct cable connection to Singapore so there’s a logical nexus where WA becomes another market to service Singapore rather than servicing the east coast of Australia.”
JLL’s Senior Director, Industrial & Logistics – Australia, Matt Lee said leading operators are responding to a heightened emphasis on sustainability, with a focus on low-carbon strategies and power purchase agreements (PPAs) for renewable energy.
“Data centre operators are exploring alternative power sourcing strategies for onsite power generation including small modular reactors (SMRs), hydrogen fuel cells and natural gas
“Operators are proactively seeking ways to boost efficiency and procure sustainable power options.”