Melbourne edges Sydney on data centre build cost in Turner & Townsend index

Building a data centre in Melbourne costs slightly less than in Sydney, according to Turner & Townsend's 2026 Data Centre Construction Index. Among 62 markets, Sydney placed 41st and Melbourne 45th, at $10.74 and $10.58 per watt respectively, using a typical 60 MW design as the basis. Auckland came in at 17th and $12.69 per watt, making it the priciest of the three Australian and New Zealand cities covered. The index draws on more than 500 projects that are under way or recently finished, plus a poll of over 400 industry experts.

Both Australian cities sit well below the main Asian hubs. Tokyo was the most expensive market for a fourth straight year at $18.28 per watt, with Osaka next at $17.15. Singapore was fourth at $15.39 per watt, Hong Kong 14th at $12.97 and Jakarta 26th at $11.96. The index put the gap down to differences in contractor depth, supply chains and project volumes. At the cheap end of the table, Shanghai led with the lowest figure, $5.79 per watt, and Mumbai and Ho Chi Minh City followed at $6.83 and $8.32.

Simon Kearney, Data Centre Lead, ANZ, at Turner & Townsend, said Sydney and Melbourne benefit from "deeper supply chains, a larger pool of experienced contractors and a steady pipeline of projects, all of which helps control costs." He added that this does not make Australia a low-cost option, pointing to power constraints and competition for suitable land. On New Zealand, Kearney said the smaller market has fewer specialist contractors, equipment must be shipped long distances and skilled labour is scarce, which partly explains Auckland's ranking.

Globally, the report found construction costs kept rising as AI-driven demand strained land, power, materials and labour. Of those surveyed, 56 per cent named power a major obstacle to delivery, while 52 per cent said utility connections typically take one to two years and 32 per cent reported more than two years. Some 81 per cent said skilled labour in their region was moderately or highly constrained. More than half, 52 per cent, reported cost increases above 6 per cent in 2026, and about one in five reported inflation above 15 per cent.

Respondents expect some easing in 2027, though not a return to earlier conditions; 28 per cent expect inflation of between 1 and 5 per cent. The report tied much of the current activity to larger AI facilities, which it said need different delivery approaches, more technical specialists and contracting models that allow for higher risk and tighter schedules. Some 52 per cent said most of their 2027 projects would be data centres supporting AI workloads.