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7.8 million sq ft real estate space required for data centre capacity expansion by 2024: JLL

Investment requirement will be close to $4.6 billion in the next two-and-a-half years

Image Courtesy: Yotta's Panvel NM1 data centre

Image Courtesy: Yotta's Panvel NM1 data centre

Increasing data usage in the financial, entertainment and retail domain and higher commitment by cloud service providers will drive Indian Data Centre (DC) industry growth, leading to demand for 7.8 million sq. ft real estate space in the next two-and-a-half years. This will entail an investment of $4.6 billion, according to JLL’s report, Data Centre Update: H1 2022.

The industry is expected to double in the next two-and-a-half years to 1318 MW from the existing 637 MW capacity.

“Mumbai on account of the highest share of capacity addition would entail a demand for 4.6 million sq ft, followed by Chennai at 1.9 million sq. ft and NCR-Delhi at 0.7 million sq ft. Regulatory approvals and construction period would lead to a 3–4-year time frame for the DC capacity to become operational. Some players are opting for the conversion of existing industrial buildings to DC facilities by using retrofit options to meet technical parameters,” said Samantak Das, Chief Economist and Head of Research & REIS at JLL India.

“The expected supply addition would entail an investment of $4.6 billion during H2 2022-2024. Mumbai will require $2.7 billion with a major share of expansion expected in the Navi-Mumbai region. Chennai would require $1.1 billion investments while NCR-Delhi would need $ 0.6 billion,” he added

Mumbai witnessed highest absorption across APAC

“Indian DC market has been at a high growth trajectory with 18% growth in occupancy from 500 MW as of the end of 2021 to 589 MW as of June 2022. Mumbai has been leading the DC hub in India and has witnessed absorption of 58 MW during H1 2022, which is also the highest across major Asia Pacific markets. Mumbai has an edge due to assured power supply, cable landing, large user market and safety from any natural hazards.” said Rachit Mohan, Head, Data Centre Advisory, India, JLL

“The sustained and growing pace of digitalisation has been one of the positive impacts of the pandemic. With government digital initiatives and support from various stakeholders, a significant transformation has been witnessed in sectors like education, healthcare, e-commerce and life sciences. This has led to strong growth for data centre storage and computing which is reflected in the continued growth of the Indian Data Centre (DC) industry. The increasing pace of digitisation of the economy would translate to higher data and compute requirements. This will lead to strong growth for the DC industry over the next few years,” he added.

1.9x growth in absorption during H1 2022 at 89 MW

DC industry witnessed robust demand growth with estimated absorption of 89 MW during the first half of 2022, as against 47 MW during H1 2021. The delivery of pre-committed supply to cloud service providers has led to sharp growth in absorption.

Mumbai continues to lead the demand pie with a 65 percent share of absorption since cloud players continue to increase their footprint as the migration to the cloud has been gaining pace.

Pune accounted for a 10 percent share due to periodic space taken by cloud service providers while Chennai took up a 9 percent share of total absorption, the report said.
Moneycontrol News
first published: Sep 27, 2022 08:13 pm