The data centre industry is expected to close the year with robust demand growth with estimated absorption in the range of 150-170MW. This growth can be attributed to the delivery of pre-committed supply to hyperscale cloud service providers (CSP) according to JLL’s Year ender ‘The 2022 story: Indian real estate’s rise from the lows.”
Colocation (Colo) operators are scaling up construction to meet the delivery targets. Some operators adopted retrofitting existing buildings to reduce the time of delivery. Supply has been mostly concentrated in Mumbai due to submarine cable connectivity, power availability and a large user market. As the year 2022 comes to an end, the supply is expected to exceed 2021 levels by a healthy margin.
“The India data center industry is expected to add 681 MW capacity by end of 2024 leading to a doubling of capacity to 1,318 MW which will need 7.8 mn sq ft of real estate space. Mumbai is expected to account for 57% of the new supply followed by Chennai at 25%. Increasing digitization is expected to save costs and make organizations resilient in times of uncertainty which will be one of the key drivers of data centers’ growth in India. The impact of 5G rollout, personal data protection legislation and investment incentives is expected to drive multi-year growth of Indian data centers,” said Rachit Mohan, head, data center advisory, India, JLL.
Like other industries, data center has been equally impacted due to global disruptions, both man-made and natural. Climate change has been at the doorstep with a sharp rise in temperatures leading to unprecedented drought-like conditions in Europe. On the other hand, some countries have faced high rainfalls posing an operational challenge for existing data centers. This coupled with supply chain disruption caused by the geo-political crisis has added to the complications. The supply disruption of sources of power generation like crude and gas has led to a rethink among Data Centre players in setting up capacities. The impact of these outages especially due to sustainability issues is likely to result in a shift of data center operations to other locations. India with its vast geographical resources, thrust on renewable energy, increasing submarine cable connectivity and cost competitiveness is likely to emerge as an alternative data center hub.
Future trends to look forward to
5G network likely to increase speed by 10X times; smart devices to explode data growth.
*The commercial rollout of the 5G has the potential to increase the median download speed by 10 times as compared to the existing 4G network. 5G is projected to account for almost 40% of India’s mobile subscriptions – 500 million – by the end of 2027 with average data usage of 50 GB per month
Supply chain disruptions and skilled manpower shortages likely to push up construction costs
*The global geopolitical crisis has adversely impacted the availability and prices of key energy inputs required for production and logistics leading to inflation across the value chain. The supply chain disruption has also led to a shortage of hardware equipment required for the functioning of data centers.
Increasing digitalisation to drive data consumption exponentially
*Digital payments volume jumped by 64% to 72 bn transactions in FY 2021-22 from 44 bn transactions in FY 2020-21. Over-the-top (OTT) video streaming market saw a sharp rise in its paid subscriber base to an estimated 70-80 million in 2021 from 14 million in 2018-5x growth in three years. 5G-driven growth in online gaming, augmented reality, and digital commerce is expected to drive data usage. Construction Week