Data Centre Industry Growth To Create 8.8 msf Realty Demand By 2026 : Research
5 October 2023: According to a JLL report, the Indian data centre industry is expected to grow with a 693 MW capacity addition during H2 2023 to 2026 as a result of rising digital growth, Digital Public Infrastructure, 5G rollout, and new applications of Artificial Intelligence (AI) like Machine Learning (ML), as well as data protection laws and state incentives. By 2026, the demand for real estate is anticipated to reach 8.8 million square feet (msf) due to the expansion of the data centre sector.
The capacity development would provide demand possibilities along the whole value chain, including in the field of building real estate, hardware infrastructure, renewable energy, fibre connection, and skilled resources. The analysis estimated that through 2026, investments in data centre infrastructure and building will total $4.4 billion.
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During H1 2023, the Indian data centre sector added 57 MW, which is 34% less than the 86 MW added in H1 2023. Deliveries increased in H1 2022 as a result of the pandemic-related spike in demand and delivery delays, whereas the supply was stable in the first half of 2023.
Due to general economic difficulties, the primary sector for DC demand, hyperscale cloud service providers (CSP), had less growth than in 2022. However, despite the anticipated increase in demand for public cloud services brought on by new technological growth patterns, they remained to occupy the pre-committed space. Although it hasn’t yet materialised, the change in demand brought on by CSPs’ captive DCs is anticipated to have a negligible effect on data centres.
66 MW were absorbed in H1 2023 as opposed to 89 MW in H1 2022, a 26% decrease as a result of a slowing in demand for public cloud services. The BFSI market, however, had more expansion in order to comply with regulatory obligations. In a similar vein, business demand rose to reduce capex expenditures. A new set of demands for the data centre business are arising as a result of the introduction of AI and ML applications, the deployment of 5G, and the rising use of Internet-of-things devices.
India’s digital ecosystem is on the verge of a high development era, with data centres serving as its cornerstone, according to Rachit Mohan, APAC lead for data centre leasing and head of data centre consulting at JLL in India. India’s digital development will be fueled by the convergence of DPI, 5G deployment, AI-driven ML apps, IoT devices, edge computing, data security regulations, new cable landings, localization of hardware, and startup-led breakthroughs. Recent advancements in hardware and software partnerships among major companies indicate the enormous growth potential. Over the next 12 to 18 months, demand for DCs is likely to increase significantly as the prospective demand from generative AI gains credibility.
In terms of technical development and exponential demand growth, the Indian data centre business will change. Existing and new data centre operators have been competing for this opportunity and are well-funded to handle this increase. The cloud service providers’ self-built facilities will acquire traction and aid the nation’s digital development, he continued.
Mumbai and Chennai will be the locations of 77% of India’s new supplies. India is a developing global data centre centre due to its access to renewable energy, skilled labour, affordable rates, and digital infrastructure. Its promise is confirmed by the interest shown by international businesses in establishing a sustained presence in the Indian market for hardware and software. The Indian data centre sector is anticipated to have secular development over the long run as it facilitates India’s digital transformation.
The first half of 2023 has been a period of calibration as the DC sector gets ready for the next level of expansion, according to Samantak Das, chief economist and head of research & REIS, India, at JLL. The operating capacity of the Indian DC sector is anticipated to increase from 778 MW as of H1 2023 to 1,481 MW in 2026. Mumbai is anticipated to contribute 45% of the additional capacity, followed by Chennai at 32%. 8.8 msf of real estate space would be needed, and $4.4 billion would need to be invested in DC infrastructure and real estate development.
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