Australia Data Centre Supply Report 2017

Executive Summary

Australia’s combination of a unique geographic situation and mature economy are the driving forces behind a growing data centre colocation market that is centred on Sydney and Melbourne.

This report takes an in-depth look at the primary metrics that tell the story of the Sydney and Melbourne colocation markets. We track the market’s size and growth trajectory and provide a five-year CAGR projection, along with a detailed analysis of the underlying supply and demand dynamics. Our proprietary methodology measures colocation supply from both a space and power perspective and we split the market between retail and wholesale colocation.

Another pillar of our methodology is to identify sub-regional markets, but in Australia, data centre clusters are less pronounced in the major locales. In place of a sub-regional analysis, we found it more useful to look at the Sydney and Melbourne markets in tandem as they exhibit certain similarities to sub-regions – having some interplay while still existing largely on a standalone basis.

The retail-wholesale composition of both markets is quite similar. Both Sydney and Melbourne have larger retail colocation markets but the directional trend is towards wholesale and the market should be about evenly split by 2021.

Not surprisingly, the growth trajectories and utilization rates of Sydney and Melbourne are also headed in similar directions. In 2016, we estimated the Sydney colocation market to be worth US $360m and projected to grow 12% y/y in 2017. Meanwhile, in Melbourne, we put that number at US $119m with a projected growth rate of 9% y/y.

The absorption rate is the most important market dynamic in Australia with space utilization outpacing that of power by a significant degree. But power densities continue to rise and power utilization is going to increasingly be a driver behind absorption in a market that is expected to see relatively fewer builds in the near-term and continue to attract power-hungry deployments.


Australia, like other mature markets in the Asia-pacific region, is a magnet for massive-scale cloud and this is even more crucial for Australia given its isolation, which has a profound impact on latency and performance. Getting closer to end users and an increasingly strict data sovereignty regime makes in-country infrastructure basically a must-have. This should keep demand steady, as all of the larger technology uptake indicators are healthy and at the head of the pack from an APAC perspective. There are challenges facing the market. The cost associated with building and operating is high, but this is offset to a certain degree by meaningfully lower power costs.

This report is an excellent resource for any service provider, investor or end user (service provider of enterprise) that is looking to understand and project the data centre market in Sydney and Melbourne.