APAC Data Centre Update: H2 2024

SYDNEY ASIA PACIFIC PRIMARY MARKET

NORTH SHORE

KEY INDICATORS*

768MW In Operation

21 / 50 Operators / Data Centres

WESTERN SYDNEY

GREATER WESTERN SYDNEY

177MW / 810MW UC / Planned

9% Colo Vacancy

Colo Hyperscale Cloud Telco

SYDNEY CBD & OUTSKIRTS

MARKET OVERVIEW Sydney continues to be a dominant force in Australia’s data centre market, maintaining its position as a critical player in the broader regional landscape. Over the past year, operational capacity has increased by 6%, while the vacancy rate has dropped by three percentage points to 9%, highlighting a strong sustained demand for colocation services. Currently, 987MW of capacity is either under construction or in planning stages, with operators holding secured land parcels that have the potential to add over 2GW in future capacity. In addition to Doma Infrastructure Group (DIG) and Markham, as new entrants, GreenSquareDC and Goodman are also planning their first data centres in Sydney. Hyperscale cloud providers like AWS and Microsoft already have significant self-built data centre operations in the city centre with substantial land reserves available for future expansion. Furthermore, Sydney’s subsea network connectivity is set to be enhanced by the addition of five new undersea cables, reinforcing the city’s role as a digital infrastructure hub. To address the growing demand for skilled professionals, the Microsoft Data Centre Academy, launched in partnership with TAFE NSW in 2024, aims to bridge the skills gap by training technicians to manage and maintain critical built environments. This initiative is a key response to the sector's increasing reliance on specialized expertise as the industry expands. AI emerged as a major focal point in the latter half of 2024. The Department of Industry, Science and Resources held its second AI Month from 14 Oct to 15 Nov 2024, highlighting Australia's AI proficiency. Further, the department launched the 'Australia-first AI Plan’ that aims to enhance capabilities, stimulate AI investment, and foster economic growth. Lastly, in response to the rise of AI technologies, the Australian Government introduced ten mandatory regulatory guardrails for AI developers and deployers in high-risk environments and for general-purpose AI models. Complementary to these regulations are ten voluntary measures outlined in the Voluntary AI Safety Standards. With continued expansion in capacity, workforce development, improved connectivity, and evolving regulatory frameworks, Sydney’s data centre market is poised for long-term growth.

ECOSYSTEM DEVELOPMENTS • Alibaba has commenced shutting down its data centres in Australia. Sydney availability zones will cease. • Blackstone , the world’s largest alternative asset manager, has successfully closed its AU$24B acquisition of AirTrunk, marking the completion of the largest-ever data centre deal globally and the largest transaction in Australia for 2024. • Commonwealth Bank (CBA) formed a collaboration with Amazon Web Services (AWS) to create an artificial intelligence (AI) factory. CBA will use AWS' EC2 P5 instances in Sydney; powered by Nvidia H100 GPUs. The AI factory would be used to train AI large language models (LLMs) to enable CBA to provide more personalized experience to its customers. • HMC Capital launched DigiCo REIT on the Australian Stock Exchange with an initial market cap of US$2.74B. HMC has made several acquisitions prior to its REIT launch that includes Australian operations of Global Switch for AU$1.93B, iseek for US$264M, and StratCap for US$28.5M. • SubCo announced that it has dropped the plan to connect Tasmania with its upcoming Sydney-Melbourne-Adelaide- Perth (SMAP) subsea cable. The company said that it wasn’t commercially viable and would need government intervention if Tasmania needs to be connected. • Telstra and Optus Telecom switched off their 3G networks in Q4 2024, freeing up the bandwidth to boost the capacity, speed and reliability of their 4G and 5G networks. With this, the 3G network shutdown was completed across all providers in Australia.

CUSHMAN & WAKEFIELD | ASIA PACIFIC DATA CENTRE MARKET OVERVIEW