What is the key Australia-specific finding in CBRE’s 2026 Asia Pacific Data Centre Trends & Outlook?

CBRE classifies Australia as one of five APAC Leading markets in 2026 alongside Japan, mainland China, India and Malaysia, while projecting a combined ~1.5GW Sydney and Melbourne supply shortfall by 2028 despite the near-term construction wave. Melbourne grew live capacity by over 30% year on year in 2025, second only to Johor in the region. Sydney sat in the 15–25% growth band. CBRE also names neoclouds, led in Australia by Firmus and Sharon AI, as a recognised demand class for the first time.

How does Australia compare to other Asia Pacific data centre markets in 2026?

Australia sits in CBRE’s Leading tier with Japan, mainland China, India and Malaysia. India and Malaysia were promoted from the High Growth tier this cycle. Sydney’s 1,531MW upcoming pipeline and Melbourne’s 1,151MW upcoming pipeline combine to 2,682MW, broadly in line with Greater Tokyo’s 2,544MW. Singapore, Hong Kong SAR and Korea sit in CBRE’s Mature tier with high capacity but limited pipeline. Indonesia, Thailand and Vietnam are smaller but expanding rapidly.

What is driving the 1.5GW Sydney and Melbourne supply shortfall CBRE forecasts by 2028?

Three factors. Pre-leasing has effectively eliminated speculative supply in both Sydney and Melbourne, so the upcoming-capacity figures overstate availability to new tenants. Hyperscaler campus-scale commitments of 250–500MW are absorbing pipeline in single transactions. And NSW grid timing and planning approval lead times continue to lag demand. CBRE specifically notes that Melbourne is more development-friendly than Sydney because of streamlined planning processes.

Which Australian neocloud operators does CBRE name in the 2026 outlook?

CBRE names Firmus and Sharon AI as Australia’s flagship neocloud providers. Firmus is building the 1.6GW Project Southgate across Tasmania, Melbourne and other Australian sites, has raised approximately US$1.35 billion in equity in six months, and is reported to be preparing an ASX listing in mid-2026 at a US$5.5 billion valuation. Sharon AI has secured up to 50MW of NEXTDC capacity to expand its sovereign-hosted footprint across Asia Pacific.

CBRE 2026 Australia data centre outlook: Leading APAC tier, 1.5GW shortfall and the neocloud demand class

At a glance

CBRE classifies Australia as one of five APAC Leading markets in 2026 alongside Japan, mainland China, India and Malaysia, with India and Malaysia promoted from the High Growth tier this cycle.
Sydney and Melbourne are projected to face a combined ~1.5GW supply shortfall by 2028, even after a near-term wave of pre-leased construction.
Melbourne grew live capacity by over 30% year on year, second only to Johor (53%) across all of APAC. Sydney sat in the 15–25% growth band.
Cap rates in Sydney (5.00–6.25%) and Melbourne (5.25–6.50%) widened in Q1 2026 alongside RBA rate moves, even as occupier fundamentals tightened.
CBRE names Firmus and Sharon AI as Australia’s two flagship neocloud operators, with Project Southgate’s US$505 million Coatue and NVIDIA-backed round and a 50MW Sharon AI commitment with NEXTDC now in print.

How CBRE sees the Asia Pacific region in 2026

The 2026 outlook is built around four observations that recur across every market profile. AI workloads are now driving incremental demand growth, with global data centre AI workload share moving from below 3% in 2022 to 13% in 2025 and a forecast 29% by 2030. Hyperscale demand is compounding at 14% per year, while non-hyperscale demand grows at 4%. Power availability is the binding constraint across every Leading market. And direct data centre investment in APAC reached a record US$11.6 billion in 2025.

CBRE groups APAC markets into three tiers. Leading markets are those with high existing capacity and an active development pipeline. Mature markets have high capacity but limited near-term pipeline. High Growth markets sit on smaller bases but have outsized expansion plans. The Leading tier in 2026 contains Japan, mainland China, India, Malaysia and Australia. Singapore, Hong Kong SAR and Korea sit in Mature. Indonesia and Thailand sit in High Growth. Vietnam and Taiwan are flagged separately as niche specialist markets.

The most interesting movement this cycle is the promotion of India and Malaysia into the Leading tier. India’s elevation reflects hyperscale demand combined with 5G rollout, Global Capability Centre expansion, data localisation laws and government AI initiatives. Malaysia’s elevation reflects Johor’s evolution into a permanent complement to Singapore, with 476MW live, 2,500MW+ upcoming and the highest live-capacity growth rate of any market in 2025 at 53%.

Three regional themes

First, hyperscaler capex on AI has moved from large to extraordinary. CBRE cites Amazon’s US$200 billion 2026 capital programme and Alphabet’s US$180–190 billion guidance, both substantially driven by AI infrastructure. ByteDance has earmarked US$23 billion for 2026, with Tencent and Alibaba planning smaller outlays. These are global numbers, but they fund the regional builds that are landing in Sydney, Melbourne, Johor, Mumbai and Greater Tokyo.

Second, the regional investment market is increasingly transacted at the platform level rather than asset by asset. The KKR and Singtel acquisition of the remaining 82% of ST Telemedia Global Data Centres in February 2026 valued the platform at US$5.1 billion across 12 markets and 2.3GW. The July 2025 sale of Yondr Group to DigitalBridge and La Caisse closed at US$5.8 billion across eight countries and 1GW. The Goodman Hong Kong Data Centre Partnership formed in July 2025 with PGGM, APG, CPPIB, CBRE IM Indirect and a Middle Eastern co-investor at US$2.7 billion for 180MW. These transactions set the price benchmarks against which Australian platform deals will be priced.

Third, capital is rotating into the cheaper construction markets. Tokyo, Singapore and Osaka top the Turner & Townsend cost ranking; Kuala Lumpur is rising sharply on Singapore spillover; Mumbai and Shanghai sit at the bottom. Sydney and Melbourne sit in the middle of the table, below all four of Tokyo, Singapore, Osaka, Auckland, Kuala Lumpur and Jakarta. Construction cost is no longer a relative disadvantage for Australia.

Australia in the Leading tier: the seat at the table

CBRE explicitly retains Australia in the Leading Markets tier this cycle. Sydney recorded 950MW of live capacity at Q1 2026 with 1,531MW upcoming. Melbourne recorded 580MW live with 1,151MW upcoming. Melbourne grew live capacity by over 30% year on year, second only to Johor across all of APAC. Sydney sat in the 15–25% band alongside Greater Seoul, Mumbai and Greater Tokyo.

A combined 2,682MW of pipeline across Sydney and Melbourne sits in the same range as Greater Tokyo’s 2,544MW. Australia is no longer a secondary APAC market by deployment scale.

Australian market	Live capacity Q1 2026	Upcoming capacity	2026 colocation price outlook	Cap rate range Q1 2026
Sydney	950MW	1,531MW	Up	5.00–6.25%
Melbourne	580MW	1,151MW	Up	5.25–6.50%
Greater Tokyo (peer)	1,086MW	2,544MW	Up	3.35–4.35%
Johor (peer)	476MW	2,500MW+	Stable	6.50–8.00%

Source: Certified Strategic Editorial, CBRE Asia Pacific Data Centre Trends & Outlook (May 2026), CBRE Asia Pacific Cap Rate Survey Q1 2026.

The Brisbane and Perth story sits underneath the headline numbers. CBRE flags both as longer-term growth markets on power availability, subsea cable connectivity and Asia proximity. Brisbane and Perth appear in the recommendations section as places where investors are advised to look for cheaper development plays.

The 1.5GW shortfall by 2028

CBRE writes that despite the near-term construction wave, Sydney and Melbourne are still projected to face a combined ~1.5GW supply shortfall by 2028. The number is not modelled in the report itself; it is presented as a working forecast from CBRE Data Centre Solutions. It is, however, internally consistent with the rest of the document.

The shortfall has three drivers. Pre-leasing has eliminated speculative supply from the equation, so the headline upcoming-capacity figures of 1,531MW (Sydney) and 1,151MW (Melbourne) overstate what will be available to new entrants. Hyperscaler campus-scale commitments of 250 to 500MW per facility are absorbing capacity in single transactions. And the planning and grid timeline for new capacity in NSW continues to lag demand.

CBRE notes a useful distinction here. Development constraints in Australia are about power grid timing and planning approvals, not contractor availability. Melbourne is described as more straightforward than Sydney because of streamlined planning processes. That distinction maps directly to the NSW Investment Delivery Authority pipeline.

In March 2026 the NSW government moved 15 data centre projects worth A$51.9 billion into the IDA pipeline to fast-track approvals. The portfolio reads as a who’s who of Sydney pipeline: AIMS Capital Management’s Bella Vista campus; Goodman’s Project Atlas in Blacktown; GreenSquareDC’s SYD1 Stage 2 (the subject of our earlier coverage at GreenSquareDC SYD1 Stage 2 endorsement); Microsoft’s Honeman Close project; three NEXTDC projects (S4 Fairfield, S5 Ryde, S7 Eastern Creek); Stack Infrastructure’s Lockwood Road site; and multiple Stockland-led developments.

The IDA process screened out a further ~A$40.7 billion of proposals deemed premature or speculative. That is the rarely-quoted part of the story. NSW is now actively choosing which projects get the fast-track and which do not, and the screening ratio (around 56% by value endorsed, 44% rejected) is a useful signal of how seriously the state is taking the consultation framework. Capacity will be added, but on a principles-based basis, not on a first-in basis. Our NSW data centre consultation paper coverage set out the five principles that now underwrite this approval logic.

Hyperscalers are now committing to Australia at Japan-equivalent scale

Three Australia-specific hyperscaler commitments in the past year have changed the regional capex picture.

Microsoft pledged A$25 billion (US$17.90 billion) to expand Azure AI supercomputing and cloud infrastructure in Australia by end-2029. The commitment is Microsoft’s largest ever investment in the country and includes a target of expanding Azure’s Australian footprint by more than 140%. Microsoft’s parallel Japan commitment for the same window is US$10 billion. On these announced figures, Australia is now attracting nearly 80% more Microsoft cloud and AI capex than Japan.

Amazon committed A$20 billion (US$13 billion) over 2025–2029 to expand, operate and maintain Australian data centre infrastructure, alongside three new Victorian and Queensland solar farms adding more than 170MW of renewable capacity.

Anthropic signed a memorandum of understanding with the Australian government on 1 April 2026, exploring investment in data centre infrastructure and energy across the country in line with the new national expectations. The MoU was paired with announced meetings with NEXTDC, AirTrunk and CDC, which we covered in our Anthropic Australia MOU and operator implications analysis. The MoU is preliminary and explicitly not legally binding, but it is the second frontier-lab inbound after OpenAI’s announced hyperscale AI campus and large-scale GPU supercluster in Western Sydney with NEXTDC.

Aggregated, the announced Australia-specific commitments from Microsoft, Amazon and ongoing OpenAI and Anthropic deployments now sit at approximately US$31 billion across 2025–2029, before counting domestic capex by Google, NEXTDC, AirTrunk, CDC, GreenSquareDC, Macquarie or any of the named neocloud operators.

Neoclouds: from emerging theme to recognised demand class

CBRE devotes two pages of the report to neocloud providers and Australia is one of seven markets identified as high potential for neocloud expansion alongside Malaysia, Indonesia, Thailand, India, Kyushu and Hokkaido in Japan, and Greater Seoul in Korea.

The structural rationale CBRE sets out for Australia is direct. Hyperscalers are already in market and provide a ready customer base for neoclouds offering GPU-as-a-Service capacity. Powered land remains accessible at scale. And data sovereignty regulations under the new national expectations create demand for locally-domiciled compute providers.

The Australian operators named in the report are Firmus and Sharon AI. CBRE also names Yotta, E2E Networks and Neysa AI in India, and Sustainable Metal Cloud in Singapore. CoreWeave, Lambda and Nebius are flagged as the global comparators.

The Australia-specific deal trail CBRE references is now well-documented in the public record:

Firmus has raised US$505 million in a Coatue Management-led round with NVIDIA participation, valuing the company at US$5.5 billion. The round is Firmus’ third equity raise in six months, bringing total capital raised in that window to approximately US$1.35 billion. The Australian Financial Review has reported that the round is Firmus’ final equity step before a planned ASX listing in mid-2026. Firmus’s Project Southgate is targeted at approximately 1.6GW of computing capacity within three years across Tasmania, Melbourne and other Australian sites, with at least one global hyperscale customer reportedly signed.
Sharon AI has secured up to 50MW of capacity commitments with NEXTDC to expand its data centre footprint across Asia Pacific, anchoring its position as a NEXTDC-hosted sovereign neocloud.

The report notes that landlords favour operators with stronger financial backing, particularly where development involves debt financing, to meet lender requirements on credit risk management. That dynamic explains why Firmus and Sharon AI have moved fast, and why a thinly capitalised newcomer would struggle to win the same land deals. As we set out in our earlier neocloud market report, the committed Australian neocloud pipeline now exceeds 1,600MW across five operators. The CBRE inclusion confirms the category is now institutional, not speculative.

Yields are widening in Sydney and Melbourne even as fundamentals tighten

The most counter-intuitive finding in the report sits in the cap rate chapter. Indicative hyperscale cap rates in Sydney (5.00–6.25%) and Melbourne (5.25–6.50%) widened in Q1 2026 from the Q3 2025 survey. Tokyo widened similarly. Singapore and Seoul compressed.

CBRE’s explanation is direct. Australia and Japan have seen interest rate increases over the six months, so investors are pricing higher required returns. The compression in Singapore and Seoul reflects government-led AI policy support combined with limited large-capacity pipeline supply, forcing investors to target existing stock and bidding up prices.

Australian data centre yields are widening at exactly the point where occupier demand is at its strongest. Cap rates above 6% at the top of the Sydney and Melbourne range are now competitive with Johor (6.50–8.00%) on a risk-adjusted basis, with materially better tenant credit. CBRE notes that investors are displaying a strong preference for longer lease tenures with built-in rental escalation. The two-speed nature of the Australian market reinforces the point: new hyperscale-oriented facilities are being absorbed quickly, while older and smaller legacy assets struggle to attract demand as occupiers target 20–100MW+ bespoke requirements.

A separate point in the report deserves attention. AirTrunk is reportedly looking to sell a majority stake in JHB1, a 150MW Johor facility, for US$1.5 billion. Bain Capital is reportedly exploring the sale of a 40% stake in Bridge Data Centres at a US$5 billion valuation. I Squared Capital is exploring a ~US$2 billion divestment of BDx. Princeton Digital Group has flagged a strategic review. Capital recycling is now a regional theme, not a Singapore one. Australian platform exits should be considered in this comparative context.

What this means and what to watch

Five items are worth tracking through the rest of 2026.

The pre-leasing ratio on new Sydney and Melbourne builds, which determines how much of the 2,682MW of upcoming capacity is actually available to incremental tenants. CBRE describes the market as effectively pre-leased; new entrants should expect to underwrite on that basis.

The NSW IDA’s principles-based screening cycle, which is now actively allocating which projects can deploy at scale and which cannot. The next IDA list will be a leading indicator of which Sydney sub-markets get the next 1,000MW of approved capacity.

Firmus’s ASX listing in mid-2026 and the disclosures it will require, which will give the public market its first direct read on Australian neocloud unit economics. Coatue, Blackstone and NVIDIA have priced the platform at US$5.5 billion in the private round.

The OpenAI and NEXTDC Western Sydney GPU supercluster, where CBRE names the agreement but the parties have not yet disclosed full capacity, timeline or commercial structure. Confirmation of MW and Phase 1 commissioning date is the next milestone.

Anthropic’s progression from MoU to operational commitments. The 1 April 2026 MoU is preliminary; the test is which Australian operator Anthropic ultimately contracts capacity with, and on what timeframe.

Australia has earned a permanent seat at the APAC top table on data centre capacity and capital flow. The remaining constraints are power, planning and the pace at which the new neocloud demand category can be brought online without breaching tenant credit standards. As we wrote in 12-to-18-month window to capture the AI infrastructure boom, the window for incumbents to lock in their position is shorter than the headline pipeline suggests.