The news: Australia’s data centre boom is adding to a record construction pipeline and stretching economic capacity, according to Deloitte Access Economics.
The value of projects under construction is expected to be near $870 billion in 2027, more than double the peak of the mining boom in 2012.
Deloitte said the total investment pipeline had swelled to a record $1.39 trillion, including $141 billion in data centre projects, up 36% over the past year.
Director Sheraan Underwood said the economy had limited capacity to absorb the extra demand, particularly as data centres compete with housing and infrastructure for resources near major cities.
The economic payoff may also be smaller than the headline investment suggests, with much of the technology imported and relatively few workers needed to operate completed facilities.
The context: The Reserve Bank of Australia lifted interest rates this week to slow activity in the stretched economy. It noted an increase in business investment, particularly data centres.
However, it said some of the inflationary impact was being offset by falling real incomes and weakness in the housing market. More than two-thirds of data centre investment would flow offshore, the bank estimated.
What they said: “Inflation is above the Reserve Bank’s target and the construction sector is already dealing with a historically large volume of work,” Underwood said.
The source: Deloitte Access Economics’ Investment Monitor