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Top 8 Cities to Add ~10 mn sq. ft. Data Centre Space in Next 2-3 Years

Min. 25-35% increase in data centre capacity usage during lockdown as companies overhauled digital infrastructure in new work environment; trend to continue
Presently, data centres occupy 7.5 mn sq. ft. space in top 8 cities; more than 10 mn. sq. ft. new space to be added over next 2-3 years
Adani, Hiranandani Group, Salarpuria Sattva etc. have massive investment plans for building data centres in India
Govt’s efforts to make data localization mandatory ensures promising future for data centres in India
The massive digital push initiated by the COVID-19 pandemic has been lucrative for data centres, which can still deliver an annual rental yield of 10-14%. The key cities leading demand for data centres include Mumbai, Chennai, Bengaluru and Hyderabad, among others.

Shobhit Agarwal, MD & CEO – ANAROCK Capital says, “Currently, data centres in the top 8 cities occupy 7.5 mn sq. ft. space and an additional 10 mn sq. ft. space is likely to be added over the next 2-3 years. Immediately after India went into a lockdown mode due to COVID-19, there was a 25-35% increase in data centre capacity usage as companies began to overhaul their digital infrastructure to deal with the new work environment.”

“The pandemic has been a massive catalyst for digital adoption across the spectrum,” says Shobhit Agarwal. “Work-from-home (WFH) compulsions, online education, video-based medical consultations, a huge increase in ecommerce and business-related video conferencing and webinars are increasing the demand for data centres. Furthermore, the government’s move to make data localization mandatory ensures a promising future for data centres in the country.”

As per industry estimates, the data centre outsourcing market in India is worth more than USD 2 bn and is projected to grow at 25% CAGR to reach USD 5 bn by FY 2023-24. In fact, data centres are emerging as an alternative real estate asset class with huge potential, and leading real estate developers are zeroing in on this opportunity to reap superior returns from early investments.

Key Players in the Fray

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