The rise of Artificial Intelligence (AI) is not only transforming industries but also unlocking lucrative opportunities for investors and developers.
As the digital economy accelerates, data centres have emerged as a critical asset class, offering long-term leases, stable revenue streams, and robust growth potential.
Once considered a niche sector, data centres are now commanding mainstream attention.
They are at the forefront of a broader shift toward alternative assets, as developers and investors diversify their portfolios to enhance resilience and long-term value.
AI Sparks Data Centre Demand
The global surge in AI adoption has ignited an unprecedented expansion in data centre construction, fuelled by the immense data processing and storage requirements of these advanced technologies.
This boom is further accelerated by the increasing reliance on digital infrastructure to support essential services such as e-commerce, streaming platforms, communication networks, and cloud computing.
The scale of projected data consumption is staggering. In 2023, an estimated 120 zettabytes of data (1 zettabyte equals 1 trillion gigabytes) were consumed globally.
By 2028, this figure is expected to soar to almost 400 zettabytes, according to Statista.
A recent CBRE report forecasts that Australia’s data centre market will nearly double to $40 billion over the next four years.
“Occupiers are now competing aggressively to increase their data centre footprint to accommodate future business needs,” said Darcy Frawley, CBRE Pacific Data Centres Capital Markets Director.
“Australia is set to see a large gap between capacity and demand in the medium term, which will lead to significant rental growth and make the sector even more appealing for data centre investors.”
Recent high-profile deals, including Blackstone's $24 billion acquisition of AirTrunk - which operates 11 data centres across Asia-Pacific - underscore the sector’s momentum.
However, challenges loom.
Energy consumption remains a critical issue, as data centres require vast amounts of power to run high-performance servers and maintain cooling systems.
To address this, operators are ramping up investments in renewable energy solutions, including solar and wind power.
At the same time, regulatory bodies are imposing stricter sustainability requirements, pushing developers to integrate green building practices and energy-efficient technologies into new projects.
The Rise of Alternative Assets
The increasing interest in data centres reflects a broader movement toward Australia’s $100 billion alternative investment market.
These assets often benefit from government incentives and sustained market demand, making them attractive options for investors and developers seeking stability amid economic uncertainty.
As traditional sectors such as office and retail grapple with shifting tenant demands and high vacancy rates, investors and developers are diversifying their portfolios, seeking out resilient, future-proof asset classes.
Several promising alternative asset classes demonstrate compelling potential:
- Healthcare and aged care facilities continue to thrive, driven by demographic trends and increasing demand for quality care.
- Childcare facilities are gaining traction, supported by long-term leases and government-backed income streams.
- Industrial logistics hubs are booming, fuelled by e-commerce expansion and the rise of last-mile delivery services.
- Cold storage facilities are seeing significant growth, as demand rises for efficient storage solutions for fresh produce, pharmaceuticals, and supply chain optimisation.
Each of these asset classes brings unique opportunities, delivering structured rental growth and long-term tenant security, which translates into predictable cash flows and a buffer against market volatility.
As AI, digitalisation, and automation continue to reshape industries, data centres and other alternative assets are set to remain a cornerstone of resilient investment strategies, offering sustained value and long-term growth.
