The mid-range construction cost to build a data centre in Australia reached USD 9.6 million per megawatt in 2024, the highest increase in the APAC region, according to a new report from global real estate company Cushman & Wakefield [1]. New Zealand’s mid-range construction cost was USD 9.3 million. Across the region Australia and India stood out as the only two markets to see the rate of construction cost increase.
Across the region, construction costs rose 3.8% YoY, which represented a fall from the previous year (4.9%). The top five most expensive markets to build in were (in order): Japan, Singapore, Australia, South Korea and Hong Kong/China. Only India and Australia saw the rate of construction inflation increase, in both cases primarily driven by strong demand from both local and international players. In all other markets, the rate of inflation slowed or plateaued as pandemic-induced supply chain disruption continued to unwind.
India, Australia and Indonesia saw the greatest increase in construction costs (5%); Hong Kong, China saw the slowest rate of inflation (2.1%), according to report author, C&W Head of Technical Services, data centre group, Asia Pacific James B. Normandale:
“As a point of reference, construction cost inflation in 2024 outstripped local Consumer Price Index (CPI) inflation rates in all markets but India, where CPI has remained stubbornly high. While the rate of construction inflation slowed across the region year-on-year, the 3.8% increase on last year’s record high base reflects the ongoing strength of demand in key markets,” he said.
Power availability continues to top the list of challenges in almost all locations, with some mature markets now facing wait times of around seven years. Along with their demand for power, data centres’ water and land use has seen resistance from community groups and governments, with early signs that increased regulation could be forthcoming in some markets.
The power tariff in Asia Pacific in November 2024 averaged 11.5 US cents per kilowatt hour, resulting in an annual power cost of USD 30.2 million to run a 20 MW IT workload at a Power Usage Effectiveness (PUE) of 1.5. However, there is a 2.7x difference between the most and least expensive power tariffs across the region. Per Cushman & Wakefield estimates, a 0.1 reduction in PUE would result in USD 1.9 million in annual power cost savings.
Using these calculations, this size DC in Sydney would pay 11.97 US cents per kilowatt hour, resulting in an annual power cost of USD 31.5 million. In Auckland, the tariff is equivalent to 14.94 US cents per kilowatt hour, resulting in an annual power cost of USD 39.3 million. It can take 2 to 3 years for new power connections in key locations such as Sydney while in Auckland, the new connection timeline can be under six months thanks to low data centre capacity.
The only way is up
C&W said that in Australia, the development coming online in the next 12 to 18 months is likely to continue pushing costs up; the current planning plateau between land purchase and construction has kept inflation stabilised at a lower rate than interest would have indicated.
“At $9,630,000 per megawatt, it remains the third most expensive location in the region for data centre development, in line with its generally high build costs,” said Normandale.
For further information:
[1] https://www.cushmanwakefield.com/en/insights/apac-data-centre-construction-cost-guide
The Melbourne Cloud & Datacentre Convention 2025: “Transforming Enterprise, Datacenters & Cloud in Victoria” – colocated with Interconnect World – returns on 3 April 2025 at CENTREPIECE at Melbourne Park.
Its return takes place as the city achieves recognition as a growing leader in digital infrastructure. Equinix recently described Melbourne as the fastest growing ‘edge metro’ in the world and analysis from DCByte indicates a substantial forward programme of build which could see capacity across the metro area move over the next few years towards 1 GW.
The Convention for Melbourne in 2025 will focus on the key factors and requirements that are driving enterprise demand and which will drive growth and direction in future demand for digital infrastructure. The emergence of AI and digital technologies will be considered particularly in terms of the profile of different user profiles and requirements. The decisions made on the basis of
‘sustainability’ will also be discussed and broadened to include the issues of how far corporate brand objectives drive technology decisions and the value of achieving an overall industry identity locally and beyond. Other impact factors from both inside and outside the industry each command their own discussion – hyperscale, legislation, risk and security, connectivity needs.
To view the agenda or plan your visit, please visit:
https://clouddatacenter.events/events/melbourne-convention-2025/
[Author: Simon Dux]