AI Real Estate and the Importance of Data Centres

AI Real Estate and the Importance of Data Centres

23 Apr, 2024 | Market Insight

In the early days of the internet, scepticism swirled around the notion of a global network connecting computers.

People questioned its reliability, its security, and even its purpose. Yet, as history unfolded, the internet proved to be a transformative force beyond anyone’s wildest dreams. It democratised information, revolutionised communication, and reshaped entire industries. Fast forward to the present, where another technological marvel, artificial intelligence (AI), stands poised at the frontier of innovation.


Much like the internet before it, AI is being met with uncertainty and speculation. Will it surpass human intelligence? Could it fundamentally alter the fabric of society? Today, AI permeates every aspect of our lives, from personalised recommendations on streaming platforms to autonomous vehicles navigating our streets.

But what fuels the astonishing capabilities of AI?

The answer lies in the vast infrastructure of data centres, where immense amounts of data are stored, processed, and analysed with unprecedented speed and efficiency. As we delve deeper into the realms of AI, it becomes increasingly clear that data centres are the silent engines shaping the future and powering this technological revolution.

What is a Data Centre?

Data centres serve as the backbone of modern computing infrastructure, providing a physical space for organisations to store critical applications and data.

Evolving from traditional on-premises servers to virtual networks and multi cloud environments, data centres now span multiple sites, including the edge and public and private clouds. As data proliferates across these diverse environments, effective communication between data centres becomes paramount. The rise of artificial intelligence (AI) further amplifies the demands on data centres. We have previously discussed the side effects of power-intensive deep learning models requiring substantial computational resources.

GPU’s and TPU’s are specialised hardware for accelerating AI workloads, driving up power density, necessitating the construction of more energy-efficient and high-capacity data centres.

Legacy and on-premises data centres face challenges in adapting to these changes, requiring optimisation of interconnection, compute, and storage solutions to keep pace with AI advancements. Additionally, managing the heat generated by energy-intensive hardware presents both technical and environmental considerations, driving the adoption of enhanced cooling solutions like liquid cooling. As AI continues to reshape industries and drive innovation, the role of data centres in supporting its growth becomes increasingly vital.

Who are the Data Centre Players on the ASX?


NEXTDC (ASX: NXT), an ASX 100-listed technology company, is a leading Data Centre-as-a-Service provider in Asia.

They focus on building infrastructure for the digital economy, providing power, security, and connectivity for global cloud computing providers, enterprises, and governments.

Running a data centre isn’t easy and requires significant capital investment. NEXTDC recently announced a capital raise with the intention to develop its infrastructure platform in both Sydney & Melbourne to meet client demand. Commenting on that demand, NEXTDC Chief Executive Officer and Managing Director, Craig Scroggie said:

“NEXTDC continues to see significant growth in demand for its data centre services underpinned by powerful structural tailwinds. Amid this backdrop, we have decided to bring forward the development and fitout of key assets in Sydney and Melbourne to ensure we are able to meet this growth in demand, continue to support our customers, and ensure the Company is well positioned to take advantage of the diverse range of opportunities expected to present over the medium term.”

The entitlement offer aims to raise an extraordinary $1.3 billion and comprises a 1 for 6 pro-rata accelerated non-renounceable entitlement. The deal offers holders a price of $15.40 per new share, which represents a discount of 6.8% to the share price prior to the announcement of $16.52.

At the time of the announcement, NEXTDC reaffirmed its previously announced guidance with total revenue in the range of $400 million to $415 million and net revenue in the range of $296 million to $304 million. The company expects underlying operating earnings (EBITDA) in the range of $190 million to $200 million. Capital expenditure remains a significant factor and is expected to be in the range of $850 million to $900 million, more than double the expected revenue!


Strike while the iron is hot? That iron is AI and AirTrunk is looking for over $15 billion for its business.

AirTrunk is a hyperscale data centre specialist creating a platform for cloud, content and large enterprise customers across the Asia-Pacific & Japan (APJ) region. It develops and operates data centre campuses with leading technology and innovation while using unique capabilities as part of the designs and construction to provide its customers with a scalable and sustainable data centre solution at a significantly lower build and operating cost than the market.

Global Data Centre Group (ASX: GDC) is an Australian fund that provides holders with the ability to gain exposure to digital infrastructure assets. That exposure includes a stake in AirTrunk acquired through its investment into the Macquarie led consortium that acquired an 88% stake in AirTrunk.

As AI continues its meteoric rise, reshaping industries and driving innovation, the critical role of data centres in supporting this growth becomes increasingly evident.

From the early days of scepticism surrounding the internet to the present, where AI permeates every aspect of our lives, data centres have evolved into the silent engines powering technological revolutions. As power-intensive AI applications demand more computational resources, data centres face the challenge of adapting to meet these demands. Companies operating within this sector are poised to be pivotal in supporting the forthcoming wave of technological advancements. However, prudent investors must exercise vigilance in assessing the enduring quality of these investments, despite their importance.

As the world embraces the transformative potential of AI, the significance of robust and efficient data centres cannot be overstated, positioning them as indispensable players in shaping the future of technology and society.

Disclaimer: Global Data Centre Group (ASX: GDC) is currently held in TAMIM portfolios.