India leads major APAC nations in data center capacity

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YUGEN REALTY, SURAT

India is emerging as a powerhouse in the data center industry, outpacing major Asia-Pacific (APAC) countries in capacity and witnessing unprecedented growth. According to a report by CBRE South Asia Pvt. Ltd., India leads the region (excluding China) with a staggering data center capacity of approximately 950MW. This surpasses countries like Australia, Hong Kong SAR, Japan, Singapore, and Korea. Furthermore, India is poised to add an impressive 850MW of capacity during the 2024-2026 period, exceeding the growth projections of other major APAC nations.

Japan follows India with the second-highest data center capacity, boasting 892MW, trailed by Australia at 773MW, Singapore at 718MW, Hong Kong at 613MW, and Korea at 531MW.

India’s data center sector has undergone remarkable growth and transformation, with capacity doubling since the onset of the pandemic. In 2023 alone, there was an addition of 255MW of new supply, compared to 200MW in 2022, resulting in a total stock of approximately 1,030MW by the year’s end. This accelerated growth trajectory is expected to continue in 2024, with planned supply exceeding 330MW across various cities, potentially increasing the stock by 30% annually to reach approximately 1,370MW. The total data center stock in India in 2023 was around 16 million square feet.

Data centers remain among the top three preferred alternative assets for investors in the APAC region, including India. The sector has attracted significant investments from global operators, real estate developers, and private equity funds keen on capitalizing on the country’s flourishing market.

Global investors continue to show a keen interest in India’s data center market, with many exploring partnerships and joint ventures with local operators. Mergers and acquisitions (M&A) activity among operators is expected to intensify in the coming years due to the growing number of players, leading to consolidation within the market.

India’s data center sector, renowned for its resilience and potential for attractive returns, has emerged as a beacon of opportunity for investors. Between 2018 and 2023, the country secured investment commitments of over USD 40 billion from both global and domestic investors, underlining the sector’s potential for high returns, with foreign investments playing a pivotal role.

The states of Maharashtra, Uttar Pradesh, West Bengal, and Tamil Nadu have emerged as leaders in cumulative investment commitments. India is also witnessing a surge in interest from global hyperscalers, viewing it as a prime market for expansion, with many opting for custom-built facilities. In 2023, over 85% of the approximately USD 27 billion committed was targeted towards the development of hyperscale facilities.

Mumbai, hailed as the financial capital and home to key landing stations connecting India with the Middle East and Europe, remains the dominant market, accounting for over 50% share in total stock in India as of 2023. Chennai follows closely with an 18% share, thanks to its strategic location on the east coast facilitating strong connectivity to East Asia.

Over 60% of the upcoming data center supply is expected to be concentrated in Mumbai and Chennai, with Delhi-NCR, Bangalore, and Hyderabad jointly accounting for over 30% share. Anticipating the influx of supply, tenants are expected to assess their options carefully, selecting suitable data center providers and negotiating favorable terms aligned with their specific requirements. Demand is projected to accelerate in the latter half of 2024, paving the way for sustained growth in the sector.

Emerging markets such as Kochi, Jaipur, Ahmedabad, Lucknow, Patna, and Vishakhapatnam are experiencing growth, driven by their strategic locations and improved infrastructure, including enhanced power supply and fiber and cable connectivity upgrades.

The total colocation data center capacity currently stands at 1GW, more than double the figure from 18 months ago. New data center supply is projected to reach up to 250MW annually for the next five years. Cloud service providers, BFSI firms, retail, healthcare, entertainment, telecommunications, and other industries are expected to be the top occupier categories driving demand in the sector.

India’s data center industry presents a lucrative opportunity for investors, with its robust growth trajectory, significant investments, and expanding infrastructure set to propel the country into a global data center hub in the coming years.

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Disclaimer : This information has been collected through secondary research and Yugen Realty Newspaper is not responsible for any errors in the same.

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