Australia’s data centre boom is generating more competition for industrial land, with developers competing for sites that offer the scale, power, and connectivity needed to support AI.
Surging data centre demand is already influencing land values, but a growing pipeline of speculative projects raises a question for industrial property investors: what happens if the demand underpinning these premiums fails to materialise.
Research conducted by JLL shows data centre developers have been paying land premiums between 20 to 182 percent above traditional industrial values, with higher premiums seen for the larger sites needed to house AI data centres.
In Sydney’s Outer Central West, for example, 2-5 hectare lots have seen growth of 9.6% compared to 2.5% for 1 hectare lots over the past 12 months, according to JLL. In Melbourne’s West, 2-5 hectare lots grew by 16.5% versus 4.4% for 1 hectare lots.
The scale of Australia’s proposed data centre pipeline is striking. Data Centres Australia’s April 2026 Forecast Report identified 21.6 gigawatts (GW) of capacity at various stages in the pipeline. Of this, 78% was classified as early stage capacity, with just 0.2GW of this actually under construction.
This distinction matters for industrial property. Early stage projects are not equivalent to funded developments ready to proceed. Many still need to secure electricity connections, planning approvals, financing, and committed customers. On top of this, hyperscale data centres are having to deal with growing community pushback.
