Regional Queensland is becoming a focus for hyperscale AI data center campus development, raising questions about incumbent Australian property company Dexus's competitive position.
The race to build computing capacity for artificial intelligence has reached regional Queensland, and Dexus (ASX:DXS) has a direct stake in the outcome. Australian Data Centres, a subsidiary in which Dexus holds a majority interest, is part of a consortium that has executed lease documentation with an Australian subsidiary of Anthropic for the initial stage of the proposed Western Downs Digital Park near Dalby. The development would be among the largest data centre campuses proposed in the country and illustrates how the scale of AI infrastructure is reshaping where and how data centres are built.
For decades, Australian data centres clustered in metropolitan areas close to network connections and enterprise customers. The power demands of training and running large AI models are changing that calculation. The Western Downs site was selected for its proximity to the Braemar electricity generation precinct and a direct connection to existing high-voltage transmission infrastructure. It sits near the Kogan Creek Power Station.
The master plan envisages a staged development across several phases, including data centre buildings, a substation, battery-backed power systems and temporary accommodation for construction workers. The facility is planned to use air-cooled technology supplemented by closed-loop liquid systems, with rainwater harvesting as the preferred operational water source and wastewater reuse also planned.
In the consortium, Australian Data Centres holds a minority stake alongside Singapore-based developer Zerra DC and Macquarie Capital, which is also acting as financial adviser. Australian Data Centres is undertaking a capital raising to bring additional investors into its business. Dexus has said it may participate but has not yet decided whether it will. Critically, the obligations of Australian Data Centres to fund the initial and later stages of the project are subject to customary approvals, including approval from the Dexus board.
The project has not yet secured its key regulatory clearances. A development application has been lodged with the Western Downs Regional Council and remains under assessment. Anthropic's involvement is also subject to Foreign Investment Review Board approval. Until these approvals and funding decisions are finalised, large-scale construction cannot proceed.
Queensland Premier David Crisafulli has promoted the project following a US trade mission meeting with Anthropic, pointing to the state's energy security and streamlined approvals process. However, the scale of the campus has drawn scrutiny. Climate groups have raised concerns about the emissions profile of the facility if it draws on Queensland's current electricity mix and about potential reliance on gas-fired generation. The Greens have also criticised the plan. The developer has emphasised its air-cooled design and water management approach in response to resource concerns.
The Western Downs proposal is part of a broader surge in AI infrastructure investment in Australia. NEXTDC has raised fresh capital for its development pipeline, Goodman Group continues to expand its global data centre platform, and Firmus Technologies is preparing for a share market listing. For investors following AI stocks, the Dexus exposure is notable because it comes through a property group rather than a dedicated data centre operator.
The next steps are clearly defined but not yet complete: the council decision on the development application, Foreign Investment Review Board approval for Anthropic's involvement, the Australian Data Centres capital raising and the Dexus board's decision on funding. Initial operations are targeted to begin in the period ahead, subject to these approvals.