Growing digital public infrastructure, 5G rollout and new applications of Artificial Intelligence (AI) coupled with data protection laws and state incentives will add 693 MW of data centres in India between H2 2023 to 2026, according to a real estate consultancy JLL.
This would entail a demand for 8.8 million square feet (msf) of real estate space. Data centre infrastructure and real estate construction would require investments of $4.4 billion until 2026.
The Indian data centre industry added 57 MW during H1 2023, which is 34 percent lower than 86 MW added in the same period last year.
"The capacity expansion would create demand opportunities across the value chain in real estate construction, hardware infrastructure and renewable energy. The pandemic-related spurt in demand and delays in deliveries led to higher deliveries in H1 2022, while the first half of 2023 witnessed steady supply," the report added.
The first half of 2023 has been a period of calibration as the DC industry gears up for the next level of growth, it said. The operational capacity of the Indian DC industry is expected to grow to 1,481 MW in 2026 from 778 MW as of H1 2023. "Mumbai is expected to account for a 45 percent share of capacity addition followed by Chennai at 32 percent," Samantak Das, Chief Economist and Head of Research & REIS, India, JLL, said.
Decline in H1 absorption
The H1 2023 witnessed the absorption of 66 MW compared to 89 MW in H1 2022, a 26 percent decline due to demand moderation for public cloud services.
However, the BFSI segment witnessed higher growth to align with regulatory requirements. Similarly, enterprise demand increased to save on capex costs. The advent of AI and Machine Learning (ML) applications, the rollout of 5G and the increasing usage of Internet-of-Things (IoT) devices signal a fresh set of demands emerging for the data centre industry.
"The recent technological and hardware partnership developments among leading players signal the huge growth potential. The potential demand from generative AI is gaining credence and is expected to grow substantially over the next 12-18 months driving demand for DCs," Rachit Mohan, APAC Lead – Data Center Leasing and Head - Data Centre Advisory, India, JLL said.
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