7.8 million sq ft real estate space required for data centre capacity expansion by 2024: JLL

Increasing data usage in the financial, entertainment and retail domain and higher commitment by cloud service providers will drive Indian Data
Centre (DC) industry growth leading to demand 7.8 million sq. ft of real estate space in the next 2.5 years. This will entail an investment of USD 4.6 billion, according to JLL’s report

Data Centre Update: H1 2022. The industry is expected to double in the next two and half years to 1318 MW* from the existing 637 MW capacity.
“Mumbai on account of the highest share of capacity addition would entail a demand for 4.6 million sq ft, followed by Chennai at 1.9 million sq. ft and NCR-Delhi at 0.7 million sq ft.

Regulatory approvals and construction period would lead to a 3–4-year time frame for the DC capacity to become operational. Some players are opting for the conversion of existing industrial buildings to DC facilities by using retrofit options to meet technical parameters.” Dr Samantak Das, Chief Economist and Head of Research & REIS at JLL India. “The expected supply addition would entail an investment of USD 4.6 billion during H2 2022- 2024. Mumbai will require USD 2.7 billion with a major share of expansion expected in the Navi-Mumbai region. Chennai would require USD 1.1 billion investments while NCR-Delhi would need USD 0.6 billion,” he added Mumbai witnessed the highest absorption across APAC during H1 2022 “Indian DC market has been at a high growth trajectory with 18% growth in occupancy from 500 MW as of the end of 2021 to 589 MW as of June 2022.

Mumbai has been leading the DC hub in India and has witnessed absorption of 58 MW during H1 2022, which is also the highest across major Asia Pacific markets. Mumbai has an edge due to assured power supply, cable landing, large user market and safety from any natural hazards.” said Rachit Mohan, Head, Data Centre Advisory, India, JLL.

“The sustained and growing pace of digitalisation has been one of the positive impacts of the pandemic. With government digital initiatives and support from various stakeholders, a significant transformation has been witnessed in sectors like education, healthcare, e-commerce and life sciences. This has led to strong growth for data centre storage and computing which is reflected in the continued growth of the Indian Data Centre (DC) industry.

The increasing pace of digitisation of the economy would translate to higher data and compute requirements. This will lead to strong growth for the DC industry over the next few years.” he added. 1.9x growth in absorption during H1 2022 at 89 MW DC industry witnessed robust demand growth with estimated absorption of 89 MW during the first half of 2022, as against 47 MW during H1 2021. The delivery of pre-committed supply to cloud service providers has led to sharp growth in absorption.

Mumbai continues to lead the demand pie with a 65% share of absorption since cloud players continue to increase their footprint as the migration to the cloud has been gaining pace. Pune accounted for a 10% share due to periodic space taken by cloud service providers while Chennai took up a 9% share of total absorption.

Pre-commitments drive 86 MW supply delivery – 67% increase over H1 2021 supply The supply growth has been in sync with absorption trends as 86MW supply addition has been estimated during H1 2022. Operators have been following the strategy of building capacity based on pre-commitments by hyper-scale cloud players with a minimal speculative capacity build. As a result, overall occupancy stood at 92.5 % of the supply. Mumbai and
Chennai together accounted for 83% of the supply during the first half of 2022.

Apart from colocation supply, self-build ambitions by Cloud service providers (CSPs) are visible in some DC hubs. Hyderabad has been successful in attracting CSPs to set up self- build capacities by offering regulatory incentives and a proactive approval process by the state government. On the other hand, NCR-Delhi has been able to attract colocation operators to set up operations in the region. The colocation data centre offers space for rent to third parties to maintain their servers or other network equipment.

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