India's data centre market has witnessed an investment of USD 14 billion in the last five years, and the cumulative funding could cross USD 20 billion by 2025 as investors look for assets with stable income, according to CBRE.
Real estate consulting firm CBRE on Tuesday released its latest report 'Data Centres in India: Powering Up Real Estate in a Data-High Era', stating that there has been a surge in demand for data centres in India on growing digitalisation and policy impetus.
The COVID pandemic has accelerated the adoption of technology and data usage has increased significantly, it said. Moreover, CBRE noted that OTT, online gaming, increased smartphone usage, e-commerce, online schooling by edtech platforms, location-agnostic work, along with advanced technologies, including machine learning, 5G, blockchain and artificial intelligence have led to a multifold jump in data transmission and need for high spec servers.
DCs (Data Centres) are the top alternate real estate investment choice for investors across the globe, CBRE said, adding that it expected investments to scale new heights due to emerging preference among investors for assets providing stable income streams. "Over the last five years, the Indian DC market witnessed investment announcements of about USD 14 billion in this sector.
"The recent government announcement to grant the coveted 'infrastructure status' to DCs is expected to further ease access to global capital for stakeholders through the external commercial borrowing route. Therefore, we anticipate that cumulative DC investments would cross USD 20 billion by the end of 2025," the report highlighted. This means that a further investment of USD 6 billion is expected by 2025.
"With businesses across sectors expanding their digital infrastructure, DCs are becoming increasingly important as a larger alternate real estate class," said Anshuman Magazine, Chairman and CEO - India, South-East Asia, Middle East & Africa, CBRE. Stating that Tier II and III could also see a rise in demand, Magazine said he expects heightened DC growth and continued interest from investors looking to capitalise on the attractiveness of DCs as an alternative real estate investment option.
Ram Chandnani, Managing Director - Advisory & Transactions Services of CBRE India, said, "Technology and automation will also play a key role in terms of how DCs evolve over the next three to five years". The data centre stock in India exceeded 9 million square feet with a 600+ MW capacity. It is expected that the DC capacity will almost double by 2024, with more than 400 MW currently under construction across cities in India. Mumbai led in terms of pan-India DC stock, accounting for a share of about 48 per cent, followed by Bengaluru at about 18 per cent, along with Chennai (9 per cent).
In addition, Delhi-NCR, Pune, Hyderabad, and Kolkata accounted for the remaining 25 per cent of the DC market in India. Mumbai is expected to lead the supply addition, followed by Bengaluru, Chennai, and Delhi-NCR.
According to CBRE, enterprise DCs are captive setups, which are owned and operated by the corporates. Hyperscale DC denotes large power requirements (typically multi-megawatts, or at least more than 2 MW), and the end user is specifically a cloud provider or large tech company with requirements for scalable power, storage and cooling.Co-location DC means a specialist, standalone data centre facility typically operated by a third-party provider for multiple occupiers. Companies share space and power infrastructure for storing and running their IT equipment, akin to a multi-tenant office building or apartment complex.