Info-tech

Covid-19-induced digital push turns lucrative for data centres

Anil Urs Bengaluru | Updated on August 04, 2020 Published on August 04, 2020

According to industry estimates, the data centre outsourcing market in India is worth more than $2 billion   -  Getty Images/iStockphoto

Adanis, Hiranandanis, Salarpuria Sattva, CtrlS & NTT commit huge sums of money

The massive digital push initiated by the Covid-19 pandemic has been lucrative for data centres, which are expected to deliver an annual rental yield of 10-14 per cent.

The demand for data centres is increasing in cities like Mumbai, Chennai, Bengaluru and Hyderabad. The top eight cities are expected to add over 10 million square feet of data centre space in the next 2-3 years.

Shobhit Agarwal, MD & CEO – Anarock Capital, said, “Currently, data centres in the top 8 cities occupy 7.5 million square feet space and an additional 10 million square feet space is likely to be added over the next 2-3 years. 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.”

Massive catalyst

“The pandemic has been a massive catalyst for digital adoption across the spectrum,” explained Agarwal and added “Work-from-home (WFH) compulsions, online education, video-based medical consultations, huge increase in e-commerce and business-related video conferencing and webinars are increasing the demand for data centres. Further, the government’s move to make data localisation mandatory ensures a promising future for data centres in the country.”

According to industry estimates, the data centre outsourcing market in India is worth more than $2 billion and is projected to grow at a CAGR of 25 per cent to reach $5 billion by FY24. 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 good returns from early investments.

Key players in the fray

Leading players like Adani Group, Hiranandani Group and Salarpuria Sattva have already rolled out significant investment plans for building data centres over the next decade and more. Major investments announced in India data centres since the last two years are as follows: Adani Group & US-based Digital Realty are to invest ₹70,000 crore and their future plans is to build solar powered data parks in Andhra Pradesh over the next 20 years.

The Hiranandani Group will invest ₹15,000 crore to set up data centres (under name of Yotta Infrastructure) over the next 5-7 years in Mumbai, Panvel and Chennai. Salarpuria Sattva is to develop data centres in Bengaluru, Hyderabad and Mumbai. Hyderabad-based CtrlS will invest around ₹2,000 crore to build 4 million square feet tier-4 data centre by 2021 in Hyderabad, Mumbai and Chennai.

NTT, a Japanese tech major, will to invest ₹11,000 crore to double its capacity in the next three years

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Published on August 04, 2020
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