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India outpaces major APAC nations in data center capacity, to cross 1800 MW by 2026

May 15, 2024: CBRE South Asia Pvt. Ltd., announced the findings of its report, Asia Pacific Data Center Trends Q1 2024.  According to the report, India tops major APAC countries with the highest data center capacity of ~950MW in the Asia-Pacific region (excluding China), overtaking major countries like Australia, Hong Kong SAR, Japan, Singapore, and Korea. Moreover, India is likely to record the highest capacity addition of ~850 MW during the 2024-2026 period, higher than major APAC countries.

CountryTotal Capacity (MW) – as of end -20232024 – 2026 Upcoming Capacity (MW)
India~950~850
Japan892407
Australia773314
Hong Kong SAR613296
Singapore71898
Korea531495

After India, Japan recorded the second-highest Data centers (DC) capacity with 892 MW, followed by Australia at 773 MW, Singapore at 718 MW, Hong Kong at 613 MW and Korea at 531 MW.

The DC industry in India has experienced remarkable growth and transformation, with capacity doubling since the start of the pandemic. In 2023, there was an addition of 255 MW of new supply compared to 200 MW in 2022, resulting in a total stock of approximately ~1,030 MW by the end of the year. This accelerated growth is expected to continue in 2024, with planned supply of over 330 MW across various cities, potentially increasing the stock by 30% annually to reach around ~1,370 MW. The total DC stock in 2023 was ~16 mn. sq. ft. in India. 

Data centers (DC) continue to rank among the top three preferred alternative assets for investors in the APAC region, including India. The sector has witnessed significant investments from global operators, real estate developers, and private equity funds eager to tap into the country’s thriving market. 

Key investments in India Investment Value (USD million) Investment Region
STT GDC India~1,000Multiple cities
Colt DCS~750Tamil Nadu & Maharashtra
NTT~542Tamil Nadu & West Bengal
CapitaLand~162Maharashtra
BAM Digital~30Tamil Nadu

Global investors retain a strong interest in the Indian data centre market, with many groups eyeing partnerships and joint ventures with local operators. M&A activity among operators is likely to pick up in the coming years due to the growing number of players, which should result in some consolidation before the market becomes too fragmented. 

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India’s data center sector, with its resilience and potential for attractive returns, has emerged as a beacon of opportunity for investors. The sector’s allure is further enhanced by the fact that between 2018 – 2023, India secured investment commitments of more than USD 40 billion from both global and domestic investors. This significant influx of capital underscores the sector’s potential for high returns, a factor that has positioned it as a preferred choice among investors, with foreign investments playing a dominant role. 

The top states that dominated the cumulative investment commitments include Maharashtra, Uttar Pradesh, West Bengal, and Tamil Nadu. India is also attracting global hyperscalers who view it as a prime market for expansion, with many of them opting for their customised build-to-suit (BTS) facilities. In 2023, more than 85% of ~USD 27 billion committed is being targeted towards the development of hyperscale facilities.

Strong DC supply pipeline

Mumbai, known for its status as the financial capital and hosting key landing stations connecting India with the Middle East and Europe, remains the dominant market with over 50% share in total stock in India as of 2023. Reliable power supply, broadband connectivity, and availability of skilled manpower further contribute to Mumbai’s appeal as a sought-after destination. Chennai, with an 18% share, follows as the second most popular market due to its strategic location on the east coast, facilitating strong connectivity to East Asia.

Notably, more than 60% of the upcoming supply would be concentrated in Mumbai and Chennai, while Delhi-NCR, Bangalore, and Hyderabad are jointly expected to account for over 30% share. With the anticipated supply influx, tenants are expected to carefully assess their options, select suitable DC providers, and negotiate favorable terms aligned with their specific requirements. Demand is likely to pick up pace in H2 2024, paving the way for continued growth in this 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 along with fibre and cable connectivity upgrades.

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Total colocation data centre capacity currently stands at 1GW, more than double the figure from 18 months ago. New data centre supply is projected to reach up to 250MW annually for the next five years. Top occupier categories anticipated to drive demand include cloud service providers, BFSI firms, Retail, healthcare, entertainment, telecommunications, others.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “India, with its favourable market conditions, is attracting multinational corporations (MNCs) seeking to expand their digital services and relocate from other Asian markets due to supply constraints. Sustained demand is expected from BFSI firms, technology corporates, and cloud service providers as they explore alternative solutions such as colocation and hyperscale facilities. Furthermore, engineering & manufacturing firms, along with technology companies, are likely to establish their own DCs specifically dedicated to R&D labs.

India has been actively promoting the DC segment through dedicated policies aimed at attracting DC operators and investors. Several states have recognised DCs as an ‘essential service’ to ensure uninterrupted operations throughout the year. These policies include provisions for uninterrupted electricity supply, access to renewable energy, fuel subsidies, essential infrastructure support for small and medium-sized enterprises (SMEs), providers of servers and racks, financial incentives, and subsidies for manufacturing DC stacks within the state jurisdictions. These incentives are instrumental in unlocking a multitude of investment opportunities across the country.”

Henry Chin, Global Head of Investor Thought Leadership and Head of Research, CBRE APAC, said, “Despite economic headwinds, data centres remain in focus for the commercial real estate industry in Asia Pacific, with notable market developments across the region. In India, 2023 was a quiet year for leasing as many companies remained in wait-and-see mode amid global economic slowdown. However, activity began to pick up strongly in Q4 2023, and there is a large volume of deals in the pipeline. Hyperscaler demand continues to grow, with many groups expanding to take on AI-related workloads. Some hyperscalers have purchased land to develop their facilities”.

Notes:

Colocation Data Centre: 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.

Hyperscale Colocation: Denotes large power requirements (typically multi-megawatts, or at least more than 2MW), and end user is specifically a cloud provider or large tech company with requirements for scalable power, storage, and cooling.

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