Australia has been ranked the world’s second most attractive destination for data centre investment, driven by a surge in demand for high-performance computing infrastructure and strategic access to AI technologies.
The latest Global Data Centres Report from Knight Frank forecasts a compound annual growth rate (CAGR) of 18 per cent in the sector globally, projecting the market will reach US$4 trillion by 2030.
Australia’s strong position has been bolstered by a recent U.S. ruling granting the country privileged access to Nvidia’s AI chips – an exemption shared by only three other nations in the Asia-Pacific region.
The experts say this strategic advantage is accelerating hyperscaler and enterprise investment, particularly in Melbourne, which is emerging as a key data centre growth location.
With power constraints and land scarcity limiting new development in Sydney, Melbourne is increasingly favoured for its availability of land, emerging AI ecosystem, and what many see as a more responsive regulatory environment in Victoria.
Hyperscalers – companies that build and operate massive data centres – and colocation providers are now shifting focus to Melbourne to deploy next-generation, high-density data infrastructure tailored for AI workloads.
The shift is being underpinned by rising rack power densities – jumping from 30–40kW to over 80kW per rack – prompting a wave of investment in liquid cooling systems and upgraded power distribution networks.
“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,” said Knight Frank’s Head of Industrial Investments, Angus Klem.
“It cemented data centres as a major growth sector for Australia, and momentum has only been building since then.”
Klem said strong overseas investor interest continues, while domestic players are preparing to enter the market.
“With capital competing for opportunities, we will continue to see rapid growth in the data centre space.”
While Melbourne leads the current growth phase, Knight Frank also points to rising interest in Perth and other capital cities, suggesting a broader transformation of Australia’s digital infrastructure landscape is underway.
