Capacity expansion by existing and new players in the Data Centre (DC) industry is expected to result in an additional capacity of 804 MW during 2022-2024, translating to 34 percent CAGR for the period, according to India’s Data Centre Report Card 2021 released by JLL.
This would mean the creation of 9.7 million sq ft of real estate space for this new capacity across India’s leading cities, it said.
A notable feature of this supply growth has been that a large share of it has been pre-committed by hyperscalers and is expected to become operational in the next three years.
The report said Mumbai and Chennai would lead in capacity expansion owing to their infrastructure advantages. As a result, both cities will account for 68 percent of the total capacity in 2024. The addition of a new cable landing that would connect these cities, going forward, would also lead to higher bandwidth.
However, landlocked locations like NCR-Delhi would also see growth in capacity addition due to government-led digital initiatives and data demand. Proactive state policies, meanwhile, are creating Hyderabad into an emerging location for hyperscale cloud players.
Real estate demand to the tune of 9.7 million sq. ft expected
The Indian DC industry is expected to add 804 MW capacity from 2022-to 2024. This would mean the creation of 9.7 million sq ft of real estate space for this new capacity across India’s leading cities. Since DC construction is driven by the design specifications of each operator, the nature of this capacity addition would differ across DC hubs in the country. However, DC hubs in India are most competitive in terms of land, construction, mechanical, electrical and plumbing costs.
“Owing to its high share of capacity addition, Mumbai is expected to create demand for 6.18 million sq ft, going forward. The comparatively high land cost of the city vis-à-vis other DC hubs will lead to a higher outlay of $ 3.3 billion for setting up data centres in the city. As Chennai has similar advantages, it would follow with 2.03 million sq ft of real estate space addition at an investment of $1 billion,” said Rachit Mohan, Head, Data Centre Advisory, India, JLL.
The strong demand growth has been matched by a supply addition of 119 MW during the year, registering a growth of 23 percent over 2020. Mumbai, Pune, and Chennai together accounted for 83 percent of the total supply during 2021.
DC operators have been following a land banking strategy to provide scalable and seamless options for hyperscale cloud players. In the Mumbai region, the Navi-Mumbai suburb has emerged as a preferred location due to its high-capacity power station, developed territorial cable connectivity, and availability of land at a lower cost than the mainland.
Hyperscale cloud players have been exploring various availability zones to ensure seamless operations. The expected growth in demand is likely to lead to strong capacity addition during 2022-2024.
The demand momentum for the Data Centres that picked up during 2020 has gained pace, with an estimated absorption of 116 MW during 2021—a 14 percent year-on-year (Y-o-Y) Hyperscale cloud players accounted for 69 percent of this absorption, as pre-committed capacities were delivered during the year.
Hyperscale cloud allows businesses to expand their IT infrastructure based on its demand. Mumbai accounted for 53 percent of the total absorption as the preferred location of leading cloud players. The sector’s three basic conditions of power supply, connectivity and customer base are amply provided by the city, making it the default location of DC operators.
Pune accounted for 21 percent of the total absorption, followed by Chennai at 15 percent, it said.