Real estate demand for data centres likely to rise

27 May 2021 CW Team

The report Poised for Growth: Data Centres in India said that the data centre demand is anticipated to reach above 2,500 MW between 2021 and 2025 with the approval of 5G, artificial intelligence (AI), Internet of Things (IoT), increasing usage of cloud services and in smart cities.

Data centres are one of the slightest hit real estate asset groups by the coronavirus outbreak, including India. The Indian data centre market is expected to observe higher growth than the global average, the report said.

Niraj Karale, Director and Head, Data Centre Services, said that India’s data localisation laws, digital transactions, social media, increasing adoption of cloud technology, and growing use of e-commerce, will lead to increased demand for data thereby, accelerating the requirement for data centre and cloud services in the nation.

Presently, data centres in India own over 7.5 million sq ft of area, using over 650 MW of power. Above 8 million sq ft and 870 MW capacity is under development and will go online between 2021 and 2025. With the advanced growth of over 10 million sq ft, for 1200 MW, India is required to produce 3000 MW data-centre potential in near future.

The report stated that India is well-positioned to work as a regional data centre hub in Asia-Pacific and is likely to bring notable investment considering India’s rich network connectivity, availability of trained labour, low climate risk, cost-benefit, and strong data protection regulations.

However, The Indian market is at an evolving stage compared to other developing countries such as the United Kingdom, Japan, Germany and the US. As of February 2021, India had 123 data centres compared to 451 in the UK, 199 in Japan, 442 in Germany and 2,653 in the US.

Karale said that the government’s stated data centre policy is expected to increase investment in the area, advance the digital economy and increase the country’s needed infrastructure to provide for the increasing digital consumption.

Presently, the data-centre industry is resilient in cities such as Chennai, Bengaluru, New Delhi, Mumbai, and Hyderabad. Pune and Kolkata are some of the forthcoming cities with demand over these locations boosting due to enhanced network connectivity, digital transformation, initiatives by the local governments and proximity to consumers.

India is increasingly witnessing a huge opportunity in edge data centres, states the real estate adviser. Savills expects tier-II cities such as Lucknow, Ahmedabad, Coimbatore, Bhubaneshwar, Jaipur, Kochi, and Nagpur to view investments in edge data centres. These are smaller than the traditional data centres, established closer to the end-users and are on the edge of the network.

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A report by the property consultancy Savills India stated that the real estate demand for data centres is set to grow by 15-18 million sq ft in the following four to five years over major Indian cities. The report Poised for Growth: Data Centres in India said that the data centre demand is anticipated to reach above 2,500 MW between 2021 and 2025 with the approval of 5G, artificial intelligence (AI), Internet of Things (IoT), increasing usage of cloud services and in smart cities. Data centres are one of the slightest hit real estate asset groups by the coronavirus outbreak, including India. The Indian data centre market is expected to observe higher growth than the global average, the report said. Niraj Karale, Director and Head, Data Centre Services, said that India’s data localisation laws, digital transactions, social media, increasing adoption of cloud technology, and growing use of e-commerce, will lead to increased demand for data thereby, accelerating the requirement for data centre and cloud services in the nation. Presently, data centres in India own over 7.5 million sq ft of area, using over 650 MW of power. Above 8 million sq ft and 870 MW capacity is under development and will go online between 2021 and 2025. With the advanced growth of over 10 million sq ft, for 1200 MW, India is required to produce 3000 MW data-centre potential in near future. The report stated that India is well-positioned to work as a regional data centre hub in Asia-Pacific and is likely to bring notable investment considering India’s rich network connectivity, availability of trained labour, low climate risk, cost-benefit, and strong data protection regulations. However, The Indian market is at an evolving stage compared to other developing countries such as the United Kingdom, Japan, Germany and the US. As of February 2021, India had 123 data centres compared to 451 in the UK, 199 in Japan, 442 in Germany and 2,653 in the US. Karale said that the government’s stated data centre policy is expected to increase investment in the area, advance the digital economy and increase the country’s needed infrastructure to provide for the increasing digital consumption. Presently, the data-centre industry is resilient in cities such as Chennai, Bengaluru, New Delhi, Mumbai, and Hyderabad. Pune and Kolkata are some of the forthcoming cities with demand over these locations boosting due to enhanced network connectivity, digital transformation, initiatives by the local governments and proximity to consumers. India is increasingly witnessing a huge opportunity in edge data centres, states the real estate adviser. Savills expects tier-II cities such as Lucknow, Ahmedabad, Coimbatore, Bhubaneshwar, Jaipur, Kochi, and Nagpur to view investments in edge data centres. These are smaller than the traditional data centres, established closer to the end-users and are on the edge of the network. Image Source