CBRE South Asia Pvt. Ltd.,India’s leading real estate consulting firm, 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.
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 data center industry in India has seen impressive growth, with capacity doubling since the start of the pandemic. By the end of 2023, there was a 255 MW increase in new supply, bringing the total stock to around 1,030 MW. This rapid expansion is expected to continue in 2024, with over 330 MW of new supply projected, potentially raising the stock by 30% annually to reach 1,370 MW. The total data center stock in India in 2023 was approximately 16 million square feet.
India's data center industry has become a promising investment opportunity due to its resilience and potential for attractive profits. Moreover, the sector's appeal is strengthened by the fact that India has received investment commitments exceeding $40 billion from both domestic and international investors between 2018 and 2023. This substantial influx of capital highlights the sector's potential for lucrative returns, making it a preferred choice for investors, particularly with foreign investments taking a leading 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 customized build-to-suit (BTS) facilities. In 2023, more than 85% of $27 billion committed is being targeted towards the development of hyperscale facilities.
Mumbai, known for its status as the financial capital remains the dominant market with over 50% share in total stock in India as of 2023. 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. 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.
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said that, India's favorable market conditions have attracted multinational corporations looking to expand their digital services. The demand for data centers is expected to remain strong from BFSI firms, technology corporates, and cloud service providers. Engineering & manufacturing firms and technology companies are also likely to set up their own data centers for R&D labs. India has actively promoted the data center segment through specific policies, including designating them as an 'essential service' and providing continuous electricity supply, access to renewable energy, fuel subsidies, and essential infrastructure support. These incentives unlock investment opportunities across the country.
Henry Chin, Global Head of Investor Thought Leadership and Head of Research, CBRE APAC, mentioned that, amid economic challenges the commercial real estate industry in Asia Pacific remains the focal point. The year 2023 was favorable for leasing and many companies remained in wait-and-see mode amid global economic slowdown. Hyperscaler demand continued to grow, with many groups expanding to take on AI-related workloads,while some hyperscalers had purchased land to develop their facilities.
Mr. Amit Sarin, Managing Director, Anant Raj Limited quoted, “The Indian data center sector is growing, driven by strong government support and the demands of the IT sector, global capability centers (GCC), and the expanding digital economy, including social media, e-commerce, digital transactions, online gaming, and streaming services. This surge presents significant investment opportunities for businesses providing top-tier data center infrastructure and services.”
He also added, “Recognizing this potential, we plan to invest over Rs. 10,000 crores to develop a 307-megawatt data center across three locations: Manesar, Rai, and Panchkula. The buildings are ready for a 157 MW capacity campus, with the remainder to be developed as greenfield projects. The initial capacity is already operational, and the next phase will be operational in the coming days.”
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