Growing use of digital technology, migration of IT infrastructure to third-party providers and increased use of data from new and existing channels will drive the digital transformation industry to grow by 678 MW between 2023 and 2025, JLL’s Data Center Update predicts: H2 2022 Report. As per the report, this expansion would require a demand of 9.1 million square feet of realty space, which would require a total investment of USD 4.8 billion in both data center infrastructure and data center sector real estate.
During the second half of 2022, the industry will add 71.8 MW, resulting in a total supply of 171 MW during 2022 – a strong growth of 31% over the previous year.
Mumbai leads the absorption pie, accounting for 43% of the share, with Delhi NCR seeing substantial hyperscale pre-commitments being delivered.
Supply growth in the market had increased by 36% with an additional 85.1 MW planned and pre-commitments making up a significant portion of the demand. Data center operators are prioritizing faster delivery times to entice additional hyperscale pre-commitments, resulting in a steady increase in supply. Mumbai and Delhi NCR represented 74% of the total supply added during H2 2022.
Rachit Mohan, Head – Data Center Advisory, India, JLL said, “Hyperscalers are significantly increasing their requirements for public cloud services and this is expected to grow further. This demand is driven by growing digital adoption across sectors and third-party players. Outsourcing of IT infrastructure to India has grown.350 MW absorption is expected to be delivered by 2025.
Samantak Das, Chief Economist and Head of Research & REIS, India, JLL said, “India’s data center industry has been on a remarkable growth trajectory, doubling from 350 MW in 2019 to 722 MW in 2022, with 27 Registered a strong CAGR of %. In 2022, the industry sees an all-time high absorption of 160 MW, resulting in a total occupancy of 660 MW, a 32% increase over the previous year. To meet rising demand, data center operators supplied 171 MW during the same period, mainly from hyperscalers.
The report noted that India’s data center industry is set to see continued growth, with a strong pre-commitment pipeline expected to result in an additional supply of 678 MW over the next three years, taking the industry’s capacity to 1,400 MW by the end of 2025. It will be MW.
Mumbai (including Navi-Mumbai) is expected to see the highest capacity addition, which will require 4.7 million sq ft of real estate, followed by Chennai with 2.3 million sq ft and Delhi NCR with 1.0 million sq ft. The real estate and data center infrastructure required to set up the data centers would require a capital outlay of USD 4.8 billion by 2025. Data center operators are expected to tap global investors or form alliances for additional supply.
Most of the players have adopted land banking strategy to meet the hyperscale demand, while setting up of captive facilities through self-construction by hyperscalers is also gaining momentum. The industry is receiving policy support from various state and central government draft personal data protection laws, which will provide further support for its growth. With these factors, the industry is expected to create a demand of 9.1 million sq ft by 2025, representing a significant opportunity for investors and stakeholders alike.
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