Australia’s rapidly expanding data centre pipeline is set to drive a major investment cycle as artificial intelligence and continued growth in digital activity increase demand for computing capacity.
Speaking on the latest episode of CommBank View: Economics & Markets, Economist Lucinda Jerogin said data centres form the physical infrastructure underpinning many digital services, with the demand for AI changing the scale of new investments.
“At its simplest, a data centre can be thought of as a warehouse or factory for computing,” Jerogin said.
“It houses servers, processors, and networking equipment, as well as the electrical and mechanical infrastructure to keep everything running.”
While existing facilities have traditionally supported data storage, content delivery and cloud computing, artificial intelligence is changing the scale and intensity of new developments.
“There’s really two driving forces,” Jerogin said. “The first is the steady growth of everyday digital activity. We’re streaming more content than ever, we’re uploading more things to the cloud, and we’re processing and using more data.
“The second and more dominant driver more recently is artificial intelligence.”
Pipeline signals a major lift in investment
Based on public announcements, CommBank estimates Australia has around six gigawatts - or 6,000 megawatts - of potential data centre capacity in its pipeline.
“That is roughly four times the operational capacity Australia had at the end of 2025,” Jerogin said.
Around half of the proposed capacity is in New South Wales and about a quarter in Victoria, with interest growing in South Australia, Western Australia, Queensland and the Northern Territory.
Only three of Australia’s 162 operational data centres currently have capacity above 100 megawatts, while many projects in the pipeline are several hundred megawatts or close to one gigawatt.
“What really stands out in this pipeline is the size of the individual projects being proposed,” Jerogin said.
Not every announced project is expected to proceed at its proposed scale or within its original timeframe. If the entire six-gigawatt pipeline were completed and fully fitted out, industry cost benchmarks suggest the total value could reach around $220 billion.
“Our central estimate is for a total nominal build of around $150 billion by 2030,” Jerogin said.
A significant boost to business investment
The pipeline is already appearing in economic indicators. Private capital expenditure in the information, media and telecommunications industry rose by almost 90 per cent in the first quarter of 2026, reaching almost three times its level a year earlier.
Building approvals in the broader commercial category that includes data centres also increased sharply in the year to May.
CommBank estimates data centres will add around six percentage points to real business investment growth in 2026 and around five percentage points in 2027.
“It is a very significant addition to real business investment growth,” Jerogin said. “And it’s going to be the dominant driver of business investment over the next few years.”
“Without data centres, Australia’s investment outlook would be far more subdued,” she said.
Despite the scale of the build-out, the direct contribution to economic growth is expected to be more modest.
“The business investment pulse is quite large, but that flow through to GDP is far smaller,” Jerogin said.
CommBank estimates data centre investment will contribute around 0.2 percentage points to real GDP growth in both 2026 and 2027.
Australian businesses undertake much of the building, electrical and mechanical work, but specialised processors, AI chips, servers and networking equipment are generally imported. Because this equipment represents most of a facility’s cost, a significant share of the investment flows offshore.
