Key Points:
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NSW is by far the largest data centre market in Australia, with Sydney accounting for the majority (65%) of the country's operational capacity and construction pipeline.
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NSW accounted for roughly two-thirds of Australia's data centre construction activity in 2025, implying an estimated construction value of approximately AUD 11 billion, concentrated in the Western Sydney growth corridor.
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Analysis by Westpac suggests that around $15 billion worth of data centre related construction is currently underway in Australia and that this could build out to exceed $70 billion.
AI Data Centre Construction. Why All The Fuss?
Only weeks before he handed down the 2026 NSW State Budget, NSW Treasurer Daniel Mookhey stated that if it wasn't for the investment in data centres and renewable energy infrastructure then NSW would be in recession.
Indicative NSW construction value for 2025
Using the estimate that Australia's data centre construction market was approximately AUD 16.5-17.0 billion in 2025and that NSW represented roughly 60-70% of national activity, NSW's share would be approximately:
|
Scenario |
NSW Share |
Estimated 2025 Construction Value |
|---|---|---|
|
Conservative |
60% |
AUD 9.9-10.2 billion |
|
Mid-range |
65% |
AUD 10.7-11.1 billion |
|
High case |
70% |
AUD 11.6-11.9 billion |
Westpac Analysis
Westpac's analysis as of December 2025 is that the investment in the Australian data centre pipeline will be between $155 billion (around 5.6% of GDP) and $75 billion (around 2.8% of GDP).
The good news is that most of the investment will be 'front loaded' and spent on construction (Buildings and Structures).
Westpac's view is that the data centre pipeline will result in a parallel boom in construction of new renewable energy related construction.
The bank's economists suggest that the value of construction currently being done in Australia is around $15 billion and that this will support additional commercial construction investment.
Westpac's analysis ( in common with economists generally) says that because the construction industry's economic 'spillovers' are fundamentally domestic , the construction phase of data centres will provide the primary economic benefit.
Forecast Of Value of Construction Work For AI Data Centres (Westpac)
Data Centre Related Construction & Share Of Commercial Construction (Westpac)
AI Data Centre Construction Cost Breakdown (Cushman and Wakefield)
