Alternatives Outlook 2024 Report

KEY TRANSACTIONS

Size AUD

Buyer/ Investor

Type Name

Yield

Date

Fujitsu Western Sydney

Direct

4.5% UniSuper

Jul-23

-

DATA CENTRES

18 McKinnon Avenue

Titus Pty Ltd

Direct

4.7m

-

Jul-23

Demand for data centres in Australia remains strong, particularly in the primary markets of Sydney and Melbourne. CAGR is projected to reach approximately 12.5% between 2021 and 2026, indicating substantial sector growth over the medium term. Government initiatives, including those focused on digital trade, the digital economy, digital health and digital governance alongside the National Broadband Strategy have played a crucial role in fostering this growth. Additionally, the rise of artificial intelligence (AI) stands out as a key driver of demand in 2024, shifting from the previous dominance of cloud storage transition as the sector’s primary underlying demand driver. The adoption of AI technologies has surged within just a year and a half, emphasising the evolving landscape of data centre requirements.

It should be noted that direct operational data centre acquisition opportunities remain tightly held. Most investment into Australia’s data centre sector in the past five years has been accounted for via development led strategy, platform investment and a moderate level of legacy data centre acquisitions. Direct stabilised real estate transactions without operational exposure are expected to demonstrate a premium to comparable prime industrial yields, justified by the more specialised nature of data centre investments. Sector size estimate: AUD 25 billion Prime yield range: 4.75%- 5.50%

The evolving Australian data centre market has seen, robust growth persist across both primary and secondary markets, with operators overcoming challenges such as limited land availability and power resources. Australia presently stands as the third-largest data centre market in the APAC region, and substantial growth is forecast in Sydney, projecting a formidable 1GW market within the next 5-7 years.

| AUSTRALIA ALTERNATIVES 10

CUSHMAN & WAKEFIELD