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Real estate demand for data centres may go up by 15-18 million sq ft by 2025

Data centres have been one of the real estate asset classes that have been least affected by the coronavirus outbreak across the globe, including in India.

Representational image. Datacenter company Yotta's NOC room.

Representational image. Datacenter company Yotta's NOC room.

Real estate demand for data centres is set to grow by 15-18 million sq ft over the next four to five years across major Indian cities, a report by the property consultancy Savills India has said.

Data centre demand is expected to touch over 2,500 megawatt (MW) between 2021 and 2025 with the adoption of 5G, Internet of Things (IoT), artificial intelligence (AI), increasing use of cloud services and in smart cities, says the report Poised for Growth: Data Centres in India.

Data centres are one of the least affected real estate assets by the coronavirus pandemic which has taken a toll on the sector. The Indian data centre market is likely to see higher growth than the global average, the report says.

“India’s data localisation laws, increasing adoption of cloud technology, and ever-increasing use of ecommerce, digital transactions and social media will result in increased demand of data thereby, pushing the need for data centre and cloud services in the country,” said Niraj Karale, director and head, Data Centre Services, Savills India.

At present, data centres in India occupy over 7.5 million sq ft area, consuming over 650 MW power. More than 8 million sq ft and 870 MW capacity is under construction and will go online between 2021 and 2025.  With the proposed development of over 10 million sq ft for 1200 MW, the country is expected to achieve 3000 MW data-centre capacity in near future.

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Also read: India's data centre sector will need $3.7-billion investment by 2023: JLL

Given India’s rich network connectivity, cost advantage, availability of skilled labour, low climate risk and strong data protection laws, India is well-positioned to serve as a regional data centre hub in Asia-Pacific and is likely to attract significant investment, says the report.

The Indian market, however, is at a nascent stage when compared to developed nations such as the US, the United Kingdom, Germany and Japan. As of February 2021, India had 123 data centres compared to 2,653 in the US, 451 in the UK, 442 in Germany and 199 in Japan.

“The government’s proposed data centre policy is likely to augment investment in the sector, boost digital economy and improve the country’s required infrastructure to cater to the growing digital consumption,” Karale said.

At present, the data-centre industry is buoyant in cities such as Mumbai, Chennai, NCR, Bengaluru and Hyderabad. Kolkata and Pune are some of the upcoming cities with demand across these locations going up due to improved network connectivity, digital transformation, initiatives by the local governments and proximity to customers.

India is increasingly seeing a big opportunity in edge data centres, says the real estate adviser. Savills anticipates tier II cities such as Ahmedabad, Bhubaneshwar, Coimbatore, Jaipur, Kochi, Lucknow and Nagpur to see investments in edge data centres. These are smaller than the traditional data centres, located closer to the end-users and are on the edge of the network.

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Moneycontrol News
first published: May 26, 2021 02:23 pm

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