Rapid adoption of artificial intelligence (AI) technology is expected to boost investments in the data centre market in India. As per a latest report by real estate services firm JLL, real estate development in the local data centre market over the next two and half years may stand at $ 5.7 billion or Rs 47,373 crore.
As demand for data centre is expected to jump significantly, investors will flock to the sector and add capacity. While in 2023, absorption of 147 MW was recorded, according to JLL as usage of AI gains pace, the demand for Indian data center (DC) is expected to be in the range of 650-800 MW during 2024-26.
Overall, these investments are expected to result in additional data center space of 10 million square-foot. Mumbai and Chennai, together, are expected to corner 73% of these real estate. With 4.41 million sq-ft, Mumbai will get over 44% of the new real estate, followed by Chennai (2.89 million sq-ft).
While the national capital region of Delhi (0.66 million sq-ft), Bengaluru (0.53 million sq-ft) and Kolkata (0.5 million sq-ft) to get smaller shares, respectively.
The exponential growth in computing power and the resulting new applications are expected to drive strong demand for DC industry over the medium term.
Cloud Service Providers (CSPs), who essentially offer IT infrastructure systems primarily for data storage and computing power accessible through the Internet, have realigned their requirements to factor in AI-led demand. The CSPs have also announced higher investments to scale up AI-led growth, it noted.
“The exponential growth in processing power and data volumes, driven by AI, necessitates the development of new data centres capable of meeting energy, processing, and cooling needs. The anticipated expansion and progression of diverse AI disciplines are projected to create additional demand for data centres, expanding their capacity requirements and advancing their capabilities” said Rachit Mohan, APAC Lead – Data Centre Leasing and Head - Data Centre Advisory, India, JLL.
During the second half of 2023, there was a 12% increase in absorption to 81 MW compared to 72 MW during the same period last year. This growth can be attributed to CSPs gaining momentum after hiccups during the first half of 2023. In Mumbai, absorption nearly doubled during this period as CSPs renewed their pace of absorption.