Two major data centre projects in Greater Noida to help boost real estate markets in the region: Experts

The decision of Greater Noida Industrial Development Authority to allot six acres in Techzone 4 to a Japanese firm, NTT India, to set up a data centre of 70 MW capacity is expected to turn the area into an attractive data centre hub due to availability of infrastructure and help the business get decentralised from traditional Mumbai and Chennai strongholds. It is also expected to boost real estate markets in the region.

NTT India would be the second data centre project in Greater Noida after Mumbai-based Hiranandani Group was given 20 acres in Knowledge Park 5 to set up a 200 MW data centre. The first of the six towers of the Hiranandani Group is expected to be ready next year.

The two companies are expected to invest close to Rs 8,000 crore and generate employment for around 1,500 people. Two more data centres may come up in the region, officials said.

It should be remembered that the massive digital push initiated by the COVID-19 pandemic coupled with the current government’s data localisation policy has paved the way for construction of hyperscale data centres across the country. Additionally, work-from-home (WFH) compulsions, online education, video-based medical consultations, a huge increase in ecommerce and business-related video conferencing and webinars have also enhanced the demand for data centres.

Given shifts in the economy, one would continue to see data consumption increase manifold for the foreseeable future, real estate experts said.

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“The impact of establishing data centres in Noida is two-fold. First, it enhances the state’s (Uttar Pradesh) standing as an IT-savvy state, enhancing job opportunities in the IT/ ITeS sector for the state’s youth as also enhancing the state’s attractiveness to investors and corporates across the country. Secondly, for those operating from the data centres in Noida, the advantage is proximity to the nation’s capital and the huge corporate/ MNC presence in the NCR,”  Niranjan Hiranandani, National President, NAREDCO, told Moneycontrol.

This will also have an impact on the real estate sector in the region.

As more jobs are created, it will drive demand for residential real estate and in turn trigger demand for retail, entertainment, medical, academic and related sub-segments. It will also open the doors for investors to buy residential real estate to rent out effectively boosting real estate demand in Noida and its peripheral areas, he explained.

The announcement by Global Tech Player NTT to set up data centre in India strengthens India’s play in the data centre business. With recent announcements by Yotta to set up 20- acre data centres in Noida, NCR is becoming an attractive destination due to availability of infrastructure and data centre business getting decentralised from traditional Mumbai and Chennai strongholds.

“Overall, this vindicates India’s positioning in data centre business to provide quality technology back-end with top-notch infrastructure and cost efficiency, supported by pragmatic government policies, both from fiscal and data protection perspective,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services (India) at Colliers International.

Other than Mumbai and Chennai, Noida and Greater Noida in NCR are among the key data centre hubs in the country. As per ANAROCK Research, Noida and Greater Noida are likely to see new data centre supply of approximately 2.3 million sq. ft. area with nearly 260 MW of IT power capacity over the next three years with total investments to the tune of nearly $ 1.3 billion. One major factor encouraging the establishment of a slew of data centres in Greater Noida and Noida is the sound infrastructure initiatives taken up in this belt in Uttar Pradesh, said Devi Shankar, President – Industrial & Logistics, Data Centers, ANAROCK Capital.

Another report had said that an additional 9.3 million sq ft of real estate space is expected to be developed by 2025 for the rapidly growing data centre industry at an investment of about ₹7,700 crore.

The data centre industry is expected to add 703 MW capacity by the end of 2025, translating into an opportunity of 9.3 million sq ft of real estate development, a report by JLL had said.

These capacity additions would require greenfield investments of $4.9 billion to fuel the future development of the sector, the report, titled 're(Imagine) Data Centres Running India’s digital economy,' by JLL said.

The impact of data protection laws, increased shift from captive to colocation (colo) data centres and implementation of new technologies like 5G, edge computing and the Internet of Things (IoT) will drive sustained investor demand for this asset class over the next five years, it said.