Rapid growth in Artificial Intelligence (AI), cloud gaming and the metaverse will fuel demand for more data centre capacity across Australiaβs major cities according to new CBRE forecasts.
In its latest Australian Data Centre Trends report, CBRE highlights that circa 183,000sqm of additional data centre space is already under construction, with notable projects including the Microsoft Data Centre in Sydneyβs Kemps Creek and Next DCβs M3 in West Footscray.
While the NSW data centre market remains the largest in Australia, CBREβs report points to a major increase in Victoriaβs capacity, spurred by the stateβs burgeoning technology sector.
Report author Bass Miller said, βA significant amount of new data centre supply will be added to Australiaβs major cities in the near term, with Victoria accounting for close to three-quarters of the total capacity under construction. New data centre capacity requirements are emerging from the rapid growth of cloud gaming and the metaverse, with AI also requiring more data, reliability, lower latency and proximity to end users.β
The IDC projects worldwide revenue for AI at US$154 billion in 2023 and surpassing US$300 billion by 2026 β representing a 27% compound annual growth rate, more than four times the growth rate of overall IT spending over the same timeframe.
From an investment perspective, the CBREβs report highlights that US$1.4 billion in data centres traded across the Asia Pacific region in 2022. Demand for the asset class remains strong, with data centres ranked as the second most popular alternative sector for investment by respondents to CBREβs 2023 Investor Intentions Survey.

Recent Australian transactions include the sale of a Sydney data centre at Ultimo leased to Optus ($56m) and iseekβs reported purchase of data centre operator YourDC, which included two South Australian assets in Mitcham and Salisbury.
CBRE Associate Director β Data Centres, Darcy Frawley, said, βWhile there have been increased concerns over carbon emissions and power consumption demand, many large-scale data centre operators are turning to renewable energy in order to offset their carbon footprints. Some operators are also looking to immersion cooling techniques to cut power costs in response to environmental concerns, increasing energy prices and higher rack density requirements.β