According to CBRE South Asia Pvt. Ltd. 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 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.
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.
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.
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.
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.
