Construcciones Yamaro: Data centre boom strains construction workforce
Rapid growth in AI infrastructure and data centre development is intensifying labour shortages across Australia and New Zealand’s construction sector, according to a new Turner & Townsend report.
Now in its 17th year, Turner & Townsend’s Global Construction Market Intelligence report analyses the global construction industry using data gathered from 112 markets across 44 countries.
The report finds that increased demand from data centre construction and health and defence projects, together with preparations for the Brisbane 2032 Olympic and Paralympic Games, is creating competition for skilled workers and driving the adoption of new delivery approaches.
According to the report, AI adoption and the push for data sovereignty have made data centres one of the fastest-growing sectors across Australia and New Zealand. The data indicates the region is at the start of a sustained data centre expansion cycle that is expected to build momentum into 2027.
The report also links rising geopolitical uncertainty to increased defence investment, including opportunities associated with the AUKUS partnership between Australia, the UK and the US. It finds that these projects, together with preparations for the Brisbane 2032 Olympic and Paralympic Games, are placing pressure on supply chains and intensifying workforce shortages.
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Turner & Townsend identifies a two-speed construction market across sectors and locations. Data centres, defence and health are performing strongly, while office development and residential construction face tougher conditions. Regional performance is also diverging, with Brisbane and Perth leading the outlook for non-residential construction activity and Adelaide gaining momentum. Sydney and Melbourne are benefiting from data centre investment, while Auckland is experiencing more subdued conditions.
Its analysis shows that construction input costs have stabilised over the past year despite volatility associated with recent geopolitical events. Greater supply chain resilience developed since the COVID-19 pandemic has helped limit the impact of recent global disruption. Construction cost drivers are also becoming more localised, sector-specific and structurally embedded, rather than being driven primarily by international shocks.
Labour availability continues to be the primary driver of construction cost escalation across Australia and New Zealand, according to the report, although renewed pressure on material costs remains a risk. The region is the most labour-constrained construction market globally, with 100 per cent of surveyed markets reporting labour shortages. Growing demand from data centres, defence, health and major infrastructure programs is intensifying competition for skilled workers, particularly in specialist trades needed for complex projects. Globally, 71 per cent of surveyed markets report labour shortages, compared with 93 per cent in the EU and 79 per cent in North America.
Data from the report shows that rapid growth in data centre investment is helping to offset weaker demand from traditional private sectors while placing additional pressure on an already constrained workforce. Data centres are now the most capacity-constrained sector in Australia and New Zealand, with around 67 per cent of markets reporting tightening contractor capacity. Continued expansion is increasing demand for specialised skills, particularly across mechanical, electrical and plumbing trades, where 83 per cent of markets in the region report shortages.
Turner & Townsend’s outlook indicates that Brisbane will become a construction hotspot in the lead-up to the 2032 Olympic and Paralympic Games. Preparations for the Games, together with health infrastructure investment, are expected to drive construction costs in the city up by 7.2 per cent in 2026. Brisbane is forecast to record the highest construction cost inflation across Australia and New Zealand this year, followed by Perth at 6.5 per cent and Adelaide and Sydney at 5.5 per cent.
Tiffany Emmett, project director and head of construction economics for Australia and New Zealand at Turner & Townsend, said changing conditions across the global construction sector are reshaping the key drivers of cost performance.
“Demand is increasingly uneven and concentrated on AI-driven sectors like data centres, while broader labour constraints, supply chain risks and geopolitical uncertainties are becoming more pronounced,” she said.
Emmett said the supply of skilled construction workers needed for data centre projects may not grow quickly enough to meet demand across Australia and New Zealand.
“AI has the potential to create significant opportunities across the construction sector, but only if the industry can attract, train and retain the workforce needed to support this growth. At the same time, recent geopolitical developments and rising energy prices are increasing the risk of renewed input cost pressures, although impacts are likely to vary by geography, sector and supply chain exposure,” she said.
“More broadly, the region is seeing increasing competition for skilled labour, with projects related to the Brisbane Olympics up against health projects in Queensland, as well as a data centre wave across the country as a whole, and increased investment in defence.
“Clients with global portfolios should use this opportunity to review international programs to ensure investment is prioritised according to local market conditions. It is no longer simply a question of relative cost, as factors such as labour availability, interest rates, supply chain capacity and digital maturity are playing an increasingly important role in successful project delivery.”
Key findings from the report
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