Data centre operator NEXTDC has acquired 169 hectares inside one of Victoria’s largest planned residential precincts. The site was earmarked for 2,000 homes. The question it raises is one governments have not yet answered.

Data centre operator NEXTDC has acquired 169 hectares of land inside the Lovely Banks precinct north of Geelong, paying around $165 million. The site was earmarked for approximately 2,000 homes as part of one of Victoria’s largest planned residential communities. Those homes will not now be built on that land.

NEXTDC intends to build a data centre.

This is not a case of a rogue buyer circumventing the planning system. NEXTDC purchased available land through a commercial transaction. But the purchase raises a question that Australian governments have not yet answered: what happens to housing supply when digital infrastructure investment outbids residential development for rezoned land, and there is no rule to stop it?

What is a Precinct Structure Plan?

A Precinct Structure Plan (PSP) is the key planning document that determines how a parcel of land in a designated growth area will be developed. It sets out the layout of roads, open space, schools, community facilities, and residential lots before any development can proceed.

In Victoria, land can be rezoned for residential use years before a PSP is approved. Until the PSP is gazetted, no homes can be built — even on rezoned land. This gap between rezoning and PSP approval is where the Lovely Banks story unfolds.

PSP preparation in Victoria currently takes an average of 4.2 years, against a government target of 2.5 years.

What Lovely Banks Was Supposed to Be

The Lovely Banks precinct sits on a plateau north of Geelong, adjacent to the established suburbs of Norlane and Corio. The land rises quickly from the flats below, with views across Geelong and Corio Bay.

The vision for the site has been in development for more than a decade. The Lovely Banks Development Group, a consortium of four landowners; Riverlee, Bamfa Properties, Costa Asset Management and Sunrise Ventures — assembled a holding of more than 1,000 hectares and developed plans for what was described as Victoria’s largest master-planned community. The full build-out would deliver 15,000 homes for up to 45,000 residents, across five neighbourhoods, five town centres, ten new schools, and extensive parkland and community facilities.

Newland Developers was appointed to deliver the project. The first stage alone, approximately 2,500 lots, was valued at between $2 and $3 billion.

The site was formally included in Geelong’s growth area when the Northern and Western Geelong Growth Area was rezoned in October 2014. But rezoning is not the same as development. No homes can be built until Precinct Structure Plans are approved for each individual precinct. As of early 2026, the Lovely Banks PSP still had no confirmed approval timeframe.

The housing was always coming. It just had not arrived yet. And now a portion of the land where it was supposed to go has been sold to a data centre operator.

Why a Data Centre Operator Wants That Land

NEXTDC’s interest in Geelong is not new. The company broke ground earlier this year on GE1, a 4.4 megawatt edge facility in the Corio industrial precinct, a few kilometres from Lovely Banks, positioned to support regional demand and cable landing infrastructure.

The Lovely Banks site offers something different in scale. At 16.9 hectares, it provides the footprint a hyperscale or large-format campus requires. Geelong has power infrastructure, proximity to Melbourne, and connection to subsea cable routes. These are exactly the inputs data centre operators are competing for across Australia right now.

A data centre operator can pay substantially more per hectare than a residential developer, because the revenue generated per square metre of a completed facility is fundamentally different from a house lot

That is not a moral failing. It is a market reality. What it means, in practice, is that rezoned residential land sitting in a planning queue is now potentially accessible to non-residential buyers who can outprice the development it was intended to support.

A Supply Problem That Was Already Serious

Geelong’s housing undersupply is not a new issue. One of Geelong’s leading developers, Richard Bisinella, has publicly stated that the city accumulated a shortfall of nearly 23,000 residential lots over the 12 years to 2026. The government’s own 2051 housing target for the City of Greater Geelong requires approximately 139,800 new homes.

The Lovely Banks PSP delay is part of that broader problem. The Creamery Road PSP — another key precinct in the Northern and Western growth area — was anticipated to receive approval in late 2026 to 2027, delivering around 3,645 lots. Bisinella has described it as misleading to include rezoned land without approved PSPs in any calculation of available supply, because no development can occur until those plans are gazetted.

Against this backdrop, the loss of 16.9 hectares and approximately 2,000 planned homes to a data centre purchase is not a rounding error. It is a meaningful reduction in a pipeline that was already struggling to move quickly enough. This pattern echoes what TGB documented at Kings Forest on the NSW North Coast, where rezoned land sat idle for over a decade while infrastructure costs accumulated and the intended housing delivery stalled. The mechanisms are different, but the outcome for the housing pipeline is similar: land counted as future supply does not produce homes on the expected timeline.

This Is Not Just a Geelong Problem

The land-use conflict between data centre development and residential housing is playing out at scale across Australia. In Sydney, three local councils told a NSW parliamentary inquiry in April 2026 that the AI building boom was already delaying homes being built. The National Growth Areas Alliance made the conflict explicit: the same growth-area councils expected to deliver around 26 per cent of Australia’s new housing under the National Housing Accord are also absorbing the majority of Sydney’s data centre pipeline.

Data centre construction draws heavily on electricians, HVAC technicians and mechanical services trades,  exactly the workers residential builders compete for. Specialist industrial roles in that sector regularly pay $120,000 to $145,000, against residential electrical rates of $60,000 to $80,000. When hyperscale projects lock in crews for 18 months at those rates, those workers are structurally unavailable for housing.

The Lovely Banks purchase adds a third dimension to that conflict: not just competing for trades, but competing for the land itself.

Victoria’s Planning System Is Already Under Pressure

The timing sits awkwardly against Victoria’s stated housing ambitions. The Property Council of Australia published a policy paper in May 2026 documenting that the average Precinct Structure Plan in Victoria currently takes 4.2 years to move from start to gazettal, against a government target of 2.5 years. That paper identified hard staging requirements, duplicated planning standards and slow infrastructure commitments as key causes of delay. It found that approximately 71 per cent of the Officer South PSP — around 760 hectares of net developable area — was incapable of being activated due to staging and infrastructure constraints.

The Lovely Banks PSP sits within that same system. The land was rezoned over a decade ago. A master developer is appointed. A major builder is engaged. Plans are drawn. But the PSP has no confirmed approval date. In that window between rezoning and approval, the land remains in the market. Buyers can acquire it. And not all of them will build houses.

What It Means for Builders in the Geelong Corridor

For builders who were anticipating Lovely Banks work entering the market, the purchase changes the pipeline calculation. The 16.9 hectares acquired by NEXTDC is a portion of the broader site, not the whole precinct. The 15,000-home vision for Lovely Banks has not collapsed. But the delivery of those 2,000 homes is now off the table for the foreseeable future, and that matters in a market already running short of supply.

The data centre project itself will generate construction work. But it is specialist work — industrial electrical, high-density structural, mechanical services — that sits at the edges of what most residential builders and trades are configured to pursue. The net effect on the residential pipeline in Geelong’s north is negative.

The broader planning environment in Victoria is improving. The State of the Housing System Report 2026 documented genuine progress: building approvals up, construction timeframes down, planning reforms rolling out. But approvals and reform do not protect rezoned land from competing uses during the gap between zoning and PSP approval. That is a structural gap in the system.

Builders watching this story should treat it as a forward planning signal rather than a crisis. The Lovely Banks precinct will still deliver significant housing over time. But the pace and composition of that delivery has shifted, and builders whose forward work pipelines included assumptions about Lovely Banks residential lots need to revisit those timelines.

The Structural Question Nobody Has Answered

Australian planning systems are well-designed for one problem: getting land rezoned for housing. They are not designed for a second, newer problem: protecting that land from competing infrastructure uses once it has been rezoned but before construction begins.

For most of planning history, that gap did not matter much. The main risk was land banking — owners holding rezoned land without developing it, collecting the value uplift and delaying supply.

The Lovely Banks purchase is different. This is not passive land banking. It is active redeployment of planned residential land to a higher-value competing use. The planning system does not currently have a mechanism to prevent it, because it was not designed to address it.

As AI infrastructure investment continues to accelerate across Australia, this will not be the last time a data centre operator acquires land inside a residential growth precinct. The question of whether governments want to do anything about it is one they will need to answer soon. For the construction industry — and particularly for builders and trades in growth corridors — that answer matters. Tracking the conditions shaping Australia’s construction pipeline is not optional. It is how builders make informed decisions about where to allocate capacity, resources and risk.

FREQUENTLY ASKED QUESTIONS

What is the Lovely Banks development in Geelong?

Lovely Banks is a planned master community north of Geelong, covering more than 1,000 hectares adjacent to the suburbs of Norlane and Corio. Developed by the Lovely Banks Development Group — a consortium of Riverlee, Bamfa Properties, Costa Asset Management and Sunrise Ventures — the full build-out is planned to deliver 15,000 homes for up to 45,000 residents, along with five town centres, ten schools, and community facilities. Newland Developers was appointed to deliver the project, with the first stage of approximately 2,500 lots valued at $2 to $3 billion. The land was rezoned for residential use in 2014, but development cannot proceed until Precinct Structure Plans are approved for each precinct.

What has NEXTDC acquired at Lovely Banks?

NEXTDC, Australia’s largest data centre operator, purchased a 16.9 hectare parcel of land inside the Lovely Banks precinct for approximately $165 million. The site was planned to deliver around 2,000 homes as part of the broader master-planned community. NEXTDC intends to develop a data centre on the site. The purchase was a commercial transaction — the land was available on the market because it had not yet progressed to an approved Precinct Structure Plan.

How does data centre development affect housing supply in Australia?

Data centre development affects housing supply in two main ways. First, it competes for the same trades — particularly electricians, HVAC technicians and mechanical services workers — that residential builders rely on, often at significantly higher wage rates. Second, as the Lovely Banks case illustrates, data centre operators can outbid residential developers for rezoned land, removing it from the housing pipeline. In Sydney, local councils have told a parliamentary inquiry that the data centre boom is already delaying homes being built. The same growth-area councils expected to deliver a significant share of Australia’s new housing are absorbing the majority of the data centre pipeline.

Why is the Lovely Banks Precinct Structure Plan delayed?

Victoria’s PSP process requires detailed planning for roads, open space, schools, infrastructure and residential layout before development can begin — even on land that has already been rezoned. The average PSP in Victoria currently takes 4.2 years from start to gazettal, against a government target of 2.5 years. Contributing factors include hard staging requirements tied to infrastructure delivery timelines, duplicated planning standards, and the complexity of large multi-precinct growth areas. As of early 2026, the Lovely Banks PSP had no confirmed approval timeframe. The Creamery Road PSP — another Geelong growth precinct — was not expected to be approved until late 2026 to 2027 at the earliest.

What does the NEXTDC purchase mean for builders in Geelong?

For residential builders anticipating work from the Lovely Banks precinct, the purchase removes approximately 2,000 planned home sites from the near-term pipeline. The broader Lovely Banks development is not cancelled — the remaining site still holds significant housing capacity — but the timeline and scale of residential delivery in Geelong’s north has shifted. Builders should treat this as a forward planning signal: revisit pipeline assumptions tied to Lovely Banks, and monitor how the remaining precinct progresses through the PSP approval process. The data centre construction itself will generate work, but it is specialist industrial construction unlikely to be accessible to most residential builders and trades.

General Information Disclaimer
This article is intended for general information purposes only and does not constitute legal, financial, or professional advice. Laws, regulations, and industry requirements vary by state and territory and change over time. Builders and trades professionals should seek independent advice relevant to their specific circumstances before making business, legal, or financial decisions.

Author: TGB Editorial