The $24 billion acquisition of Australian data centre company AirTrunk by Blackstone signals a pivotal moment for this burgeoning asset class. With data centres playing a critical role in supporting cloud computing and AI capabilities, investor demand for this alternative sector continues to soar.
The Growing Value of Data Centres
As digital infrastructure becomes indispensable to modern commerce and communication, data centres have emerged as a high-growth asset class. Supporting everything from artificial intelligence (AI) to e-commerce platforms, the sector’s fundamentals are stronger than ever.
- Market Highlights:
- Record absorption of global data centre capacity in 2023, despite supply chain delays.
- Rental growth driven by low vacancy rates and high demand.
- Global inventory growth estimated at 20–25% year-over-year in 2024.
In Australia, the gap between data centre capacity and demand is widening, making the region a hotspot for investment.
Australia’s Data Centre Boom
Australia has become a critical market for data centre expansion, particularly in Sydney:
- Global Ranking: Sydney ranks fifth in data centre inventory size and seventh in net absorption globally.
- Rental Growth: Stable rents in Sydney contrast with increases of 20% in the U.S. and 5% in Europe.
- Power Challenges: Access to energy remains a limiting factor for development timelines, attracting renewable energy investments like solar and wind farms to offset grid strain.
According to Darcy Frawley, CBRE’s Pacific Data Centres Capital Markets Director, aggressive competition among operators to expand their footprints highlights the sector’s appeal.
Investor Sentiment and Opportunities
CBRE’s Global Data Centre Investor Survey reveals robust investor confidence:
- Capital Deployment:
- 97% of respondents plan to increase investments in 2024.
- 44% aim to deploy over $500 million, up from 32% last year.
- 92% are allocating more than $100 million to the sector.
- Top Investment Segments:
- Opportunistic and value-add projects dominate interest.
- 80% of investors favor new developments, including greenfield projects and asset repurposing.
- Hyperscale build-to-suit projects are viewed as the greatest opportunity over the next 12–24 months.
- Key Markets: Tokyo, Seoul, Singapore, and Sydney lead investor preferences for 2024.
Energy Transition: A Vital Consideration
The surge in data centre demand is coinciding with broader energy transitions. Phil Rowland, CEO of CBRE’s Pacific Advisory Services, emphasizes the importance of renewable energy:
- Energy Solutions: Investors are exploring real estate options like solar farms, wind farms, and battery storage sites to meet growing energy needs.
- Grid Challenges: Electrification trends in data centres and electric vehicles are intensifying the pressure on existing infrastructure, driving innovative energy investment strategies.
The Competitive Landscape
Alternative assets, including data centres, form a $100 billion investment market in Australia. However, achieving scale in this competitive space requires strategic positioning.
Sameer Chopra, CBRE’s Head of Pacific Research, notes that the market will likely consolidate around a few major players in the next three to five years.
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