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Pritesh Swamy, head of data center research and advisory for the APAC region at Cushman & Wakefield, told RCRTech that Australia’s operational data center capacity increased 20% between December 2024 and December 2025
In sum – what to know:
Pipeline growth – Australia’s data center pipeline grew 72% year-over-year, driven by rising AI and cloud infrastructure demand.
Power constraints – Operators face growing challenges around electricity, grid access, and water availability in major markets.
AI expansion – Sydney and Melbourne continue dominating AI infrastructure growth as training workloads accelerate across the region.
Australia’s data center development pipeline expanded sharply over the past year as AI-related demand continues to reshape infrastructure planning, even as operators face mounting challenges tied to power availability, grid access and water constraints.
In an interview with RCRTech, Pritesh Swamy, head of data center research and advisory for the APAC region at Cushman & Wakefield, said Australia’s operational data center capacity increased 20% between December 2024 and December 2025, reaching 1.4 GW, while the development pipeline grew 72% during the same period to 2.8 GW.
“The development pipeline increased from 1.6GW in December 2024 to 2.8GW in December 2025, registering a 72% growth,” Swamy said.
Despite rising infrastructure constraints, Sydney and Melbourne continue to dominate the market. “Cumulatively these markets account for 85% of the operational capacity and 90% of the development pipeline,” he said, adding that around 75% of Australia’s 16 GW land-bank pipeline is also concentrated in the two cities.
According to Swamy, the concentration reflects longstanding trends across Asia-Pacific, where data centers remain closely tied to major commercial hubs due to access to customers, fiber infrastructure, utilities, and talent pools.
At the same time, developers are increasingly confronting limitations around electricity and water availability, particularly as AI workloads drive demand for higher-density infrastructure. “Power availability, grid constraints, and water are the biggest constraints in new development in Australia,” Swamy told RCRTech.
To address these pressures, operators are evaluating alternative cooling and energy strategies. “In water constrained locations, cooling technologies such as immersion cooling, and direct-to-chip liquid cooling, are fast emerging,” he said. “In power constrained locations, operators are evaluating behind the meter solutions such as on-site generation and battery-energy storage systems.”
Swamy also said operators are prioritizing sites with pre-approved utility access in order to reduce deployment timelines and secure long-term infrastructure certainty.
Beyond infrastructure availability, Australia’s regulatory and energy environment is becoming an important factor in attracting AI-related investment. “Australia’s appeal for AI-driven data-center investment is being shaped less by tax incentives and more by a combination of clear federal policy signals, strong renewable-energy integration, and strict sovereignty and security requirements,” Swamy said.
He noted that the federal government’s designation of data centers as critical national infrastructure is helping provide long-term certainty for investors, while renewable energy integration is emerging as a competitive differentiator for AI infrastructure deployments.
Demand for AI infrastructure in the region is also evolving. “Over the last couple of years, the demand for AI was largely for inference deployments however, with the rise of AI companies, government initiatives, AI adoption and integration, automation, etc., the demand for training is growing rapidly,” Swamy said.
The Australian government’s department of industry, science, and resources had previously published a set of expectations for data center and AI infrastructure developers, outlining how future projects should align with national priorities, energy policy, and sustainability goals.
The document forms part of Australia’s broader strategy to expand digital infrastructure while managing the environmental and economic impact of large-scale AI deployments. The new rules apply to new and expanded facilities, including hyperscale data centers and large AI compute sites.
At the core of the framework is the concept of “social license to operate,” with the government indicating that projects aligned with these expectations will be prioritized in regulatory processes. Energy-intensive proposals that do not meet these criteria may face delays or reduced support.
