As cloud computing continues to expand, data generation accelerates, and AI adoption surges, the demand for data centres as the core of digital infrastructure has intensified.
New Zealand, in particular, is witnessing significant growth in its data centre market. The sector is projected to experience substantial expansion, with revenue expected to reach USD $1.37 billion in 2025 and grow further to USD $1.68 billion by 2029, driven by investments in AI and cloud services24.
This growth is anticipated to be comparable to Sydney’s, with Infratil predicting that New Zealand will attract international investment in renewable energy to power its burgeoning data centre industry. The country’s strategic advantages, including access to renewable energy sources and a favourable climate, are key factors in its emergence as a major hub for data storage and cloud computing in the Asia-Pacific region.
The Rise of AI-Driven Infrastructure
In 2025, AI will continue to build momentum, with investments in AI infrastructure expected to drive growth in the data centre sector. The advancement in semiconductor technology, particularly in GPU capabilities, has enabled AI programmes to train on larger datasets at unprecedented speeds. This has made the AI ecosystem more valuable and efficient, with computation tasks that once took hours now being completed in mere seconds.
The integration of AI into data centre operations is becoming integral, as it can improve efficiency through predictive maintenance, workload optimisation, and energy management.
Hyperscalers are investing heavily in AI chip design to optimise their cloud offerings, while colocation providers focus on operational efficiency and tenant support. However, the increasing demand for AI capabilities is driving the development of specialised infrastructure within data centres.
Sustainability and Energy Challenges
The surging demand for data centre capacity, particularly for AI applications, is pushing energy usage to new limits. Experts predict that data centres will face a pivotal moment in 2025 as energy requirements continue to rise, with facilities struggling to meet these demands. The industry is exploring innovative solutions such as small modular reactors (SMRs) and liquid cooling to address these challenges.
Sustainability is critical in future data centre designs, with a focus on incorporating renewable energy sources, smart energy management systems, and advanced cooling solutions to minimise carbon footprints. AI itself is part of the solution, with AI-powered tools helping data centres manage resources more effectively, improving energy use and cooling efficiency.
Edge Computing and AI Inference
The shift towards decentralised edge computing for real-time processing is gaining traction, driven by the need for low latency and high data security. AI inference, the process of deploying trained models for real-time applications, is becoming an equivalent catalyst for growth in the data centre industry.
However, the urgency to meet this demand presents a “chicken or egg” problem: should infrastructure scale in anticipation of AI’s growth, or should it be reactive to avoid overbuilding?
Modular and software-defined solutions can future-proof operators against evolving AI requirements, allowing them to deal with the challenges of scaling infrastructure while meeting sustainability expectations. Strategic partnerships and investments in local manufacturing can mitigate risks associated with supply chain constraints.
Furthermore, the social and economic dependence on digital infrastructure will drive industry growth rates significantly, leading to a shortage of specialised skills required for critical projects. Developing talent pools within organisations will become a priority, leading to new business models in the data centre ecosystem as the skills shortage is addressed.