Work from Home effect: Data centres new asset class in realty as India’s data consumption rises during Covid

DATACENTRES HAVE emerged as the new asset class in real estate, as India’s appetite for consuming data increases at a rapid pace and firms scramble to add more capacity for storage. More so in the present times, as work from home (WFH) has become the new normal and domestic consumption is rising, which further brightens the prospects for expansion.

Analysts and market insiders point out that there is rise in interest from real estate, private equity (PE) and infrastructure funds to invest in data centres, as they anticipate growth in cloud services due to IoT, data localisation
and launch of 5G, signifying more consumption.

As per Ericsson’s mobility report (November 2019), India’s average monthly data traffic per smartphone is expected to increase from the current 7.2 GB to 24 GB by 2025. Besides, 500 million additional smartphone users are expected during the same time period.

“India will probably reach the 781-MW milestone much before, maybe by 2022-23, as more land deals have happened. Deals are happening in Navi-Mumbai, Chennai, etc, and are likely to deliver in around three years,” JLL India head (data centre advisory) Rachit Mohan told FE.

In 2020, the most active markets are Navi-Mumbai and Chennai. In 2021, Bangalore, Hyderabad and Noida are
expected to see more traction. The biggest challenge would be that over the next 18 months, most cloud services firms will come back with their revised plans with more space requirement, he added.

Another consultancy, CBRE India, in its latest report, projected that India’s data centre capacity will double by March 2025 from the present 500- 520 MW. It expects global players to continue to take interest in investing in India with focus on backing leading operators or funding prominent developers.

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