~A$2m/MW/yr of contracted EBITDA on A$6-15m/MW of build cost implies a ~13-33% EBITDA yield on cost, the spread that funds the development boom
Around A$2m per megawatt per year of contracted EBITDA on A$6m to A$15m per megawatt of build cost implies a 13% to 33% EBITDA yield on cost. Cap rates sit in a 3.5% to 7% band, and CBRE sees them widening past 6% at the top end.
Contracted EBITDA
Build cost
Implied EBITDA yield on cost
inashanu unit-economics frame: at ~A$2m/MW/yr contracted EBITDA against A$6-15m/MW build cost, hyperscale leased product carries an implied EBITDA yield on cost of ~13-33% before opex leakage and financing, the spread that funds the entire development boom. Range width reflects fit-out level and power infrastructure; not an audited margin.
Yield on cost, %: implied EBITDA range against the development benchmark
Development yield on cost
Implied EBITDA yield on cost
Anchors (continued)
| Anchor | Figure | Basis |
|---|---|---|
| Development yield on cost | 8.2% | Goodman FY26 forecast |
Margin anchors across the models
Cap rates sit in a 3.5-7% band, and CBRE sees them widening past 6% at the top end even as occupier demand peaks
Capitalisation rates, %: observed ranges and reference transactions
PwC observed AU range, 2026
Savills tier-1 APAC investment-grade
M3 / Colliers typical trading band
Telstra Clayton 2020
NEXTDC S6 analysed, vacant possession
PwC's observed Australian range is 3.50-7.04% depending on lease terms, obsolescence, quality and location; M3/Colliers put typical trading at 5.2-6.2%. Reference points: Telstra Clayton 4.2% (2020) and NEXTDC S6 analysed 6.5% (vacant possession). PwC states that enterprise-level multiples should be separated from property-level yields, so the Global Switch Ultimo sale is not plotted here.
The two-sided rate story
- Compression case: Australia captured 59% of APAC DC transaction volume in 2024 (US$1.6bn, ~10x 2023; MSCI RCA via Savills), scarcity of powered, leased product bids yields down.
- Widening case: CBRE's 2026 outlook sees Australian DC cap rates above 6% at the top end, 'yields widening even as occupier demand peaks': higher-for-longer rates plus construction-cost inflation.
- PwC's caution: the Global Switch Ultimo sale at 24.7x EBITDA implies an earnings yield of about 4.05%, leaving 'no available value arbitrage' in sale-leasebacks versus prime Sydney industrial at 4.97-5.46%. PwC treats that as an enterprise-level multiple and separates it from the property-level yields plotted above.
What moves the band from here
Watch the AirTrunk Singapore REIT pricing (Sep-Oct 2026 target) and any Blue Owl/Stack APAC process: two public marks that will either validate sub-5% stabilised yields or force a sector-wide re-mark.
The cap-rate band in one panel
Pricing power lives with power: scarcity rents accrue to powered capacity, not to buildings
The evidence
- Sydney's YoY price decline (CBRE) coexists with record-low vacancy,. evidence that new suburban wholesale supply sets the marginal price while metro/interconnection product holds premium.
- Land prices up 35-45% since 2022 (IMARC) flow into build costs,. but 8.2% yields on cost (Goodman) show developers currently outrun cost inflation.
- Net-generator compliance will re-price energy: operators with contracted renewables (NEXTDC 255 MW PPAs, AWS solar farms, AirTrunk SLL platform) hold a cost advantage that should show up in lease pricing from 2027.
inashanu estimate
inashanu pricing outlook: Sydney wholesale colocation holds US$140-215/kW/month through 2027 (supply wave caps upside), then firms as power-constrained deliverability thins the pipeline; hyperscale $/kW remains privately negotiated. Watch the REIT prospectus and any CDC contract renewals for the first public marks.
Economics dashboard: the numbers a committee should hold
Regional pricing context (CBRE, Q1 2025)
Sources
- Bloomberg via Energy Connects, as at May 2026
- Motley Fool, as at 9 Sep 2026
- Quantfolio, as at Jul 2026
- Allens, as at 2025
- Goodman FY26, as at 20 Aug 2026
- PwC, as at Mar 2026
- PwC Australia, as at 10 Mar 2026
- M3/Colliers, as at Sep 2024
- Certified Strategic/CBRE, as at 25 May 2026
- Savills APAC DC Spotlight, as at Q1 2025
- Mingtiandi, as at Jul 2026
- Kalkine, as at Jun 2026
Related
- What does data centre colocation cost in Australia?
- What is data centre land worth in Australia?
- Was AirTrunk bought at 21x or 87x EBITDA?
- Why does NEXTDC trade at such a high EBITDA multiple?
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