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Top 8 Indian cities to add 10 million sq ft data centre space in next 2-3 years: Report

IBEF:  August 05, 2020

According to an ANAROCK Property Consultants report, it is expected that top 8 Indian cities will add around 10 million sq ft data center space in the next 2-3 years aided by data localization norms and the massive digital push initiated by the COVID-19 pandemic.

At present, data centres in India’s top 8 cities occupy 7.5 million sq ft space and the key cities leading demand for data centres include Mumbai, Chennai, Bengaluru, and Hyderabad, among others. It is expected that the demand will increase post pandemic for this segment fetching annual rental yield of 10-14 per cent.

“The pandemic has been a massive catalyst for digital adoption across the spectrum. Work-from-home (WFH) compulsions, online education, video-based medical consultations, a huge increase in e-commerce and business-related video conferencing and webinars are increasing the demand for data centres,” said Mr Shobhit Agarwal, Managing Director and CEO, ANAROCK Capital.

“Immediately after India went into a lockdown mode due to COVID-19, there was a 25-35 per cent increase in data centre capacity usage as companies began to overhaul their digital infrastructure to deal with the new work environment. Furthermore, the government’s move to make data localization mandatory ensures a promising future for data centres in the country,” Mr Agarwal said.

Investment plans for building data centres in India over the next decade and more are introduced by the leading corporate entities like Adani Group, Hiranandani Group and Salarpuria Sattva.

According to the industry estimates, the data centre outsourcing market in India is worth more than US$ 2 billion and is projected to grow at 25 per cent CAGR to reach US$ 5 billion by FY2023-24. In fact, data centres are emerging as an alternative real estate asset class with huge potential, and leading real estate developers are zeroing in on this opportunity to reap superior returns from early investments

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.