India leads the Asia-Pacific data centre growth, boasting a capacity of 950 MW, surpassing markets like Australia and Japan. The sector doubled its capacity since the pandemic, with 250 MW added in 2023 and an expected 330 MW in 2024. Mumbai dominates with 50% capacity, followed by Chennai. Emerging cities like Kochi and Jaipur attract development. With over USD 40 billion in investments and Mumbai's strategic location, the industry thrives. As supply surges, tenants gain bargaining power, with demand expected from various sectors. India's data centre sector is set for robust growth, cementing its regional leadership.
India has emerged as the frontrunner in data centre growth within the Asia-Pacific region (excluding China), according to a recent report by CBRE South Asia Pvt. Ltd. With a current capacity of approximately 950 MW, India surpasses established markets like Australia (773 MW), Japan (892 MW), Singapore (718 MW), and South Korea (531 MW). This leadership is further solidified by projections of India recording the highest data centre capacity addition (around 850 MW) in the next three years.
India's data centre industry has witnessed a remarkable boom, doubling its capacity since the pandemic began. In 2023 alone, new data centre supply exceeded 250 MW, bringing the total stock to approximately 1,030 MW. This accelerated growth is expected to continue in 2024, with planned supply of over 330 MW across various cities, potentially increasing the stock by 30% annually to reach around 1,370 MW. The total data centre stock in 2023 was approximately 16 million square feet.
Data centres continue to rank among the top three preferred alternative assets for investors in the APAC region, including India. The sector has witnessed significant investments from global operators, real estate developers, and private equity funds exceeding USD 40 billion between 2018 and 2023. This significant influx of capital highlights the sector's potential for high returns, with foreign investments playing a dominant role.
Mumbai, India's financial capital and home to key landing stations connecting India with the Middle East and Europe, remains the dominant market with over 50% share in total data centre capacity in India as of 2023. Reliable power supply, broadband connectivity, and availability of skilled manpower further contribute to Mumbai's appeal. Chennai, with an 18% share, follows as the second most popular market due to its strategic location on the east coast, facilitating strong connectivity to East Asia.
While Mumbai and Chennai are the current leaders, significant growth is expected in other cities. Emerging markets like Kochi, Jaipur, Ahmedabad, Lucknow, Patna, and Vishakhapatnam are attracting data centre development due to their strategic locations and improved infrastructure, including enhanced power supply along with fibre and cable connectivity upgrades.
The anticipated data centre supply surge, exceeding 250 MW annually for the next five years, is expected to create a buyer's market in the second half of 2024. Tenants will have a wider range of options (total colocation capacity currently stands at 1 GW, more than double the figure from 18 months ago) and greater bargaining power when selecting data centre providers catering to their specific needs. With demand expected to pick up pace from cloud service providers, BFSI firms, retail, healthcare, entertainment, telecommunications, and others, India's data centre sector is poised for continued strong growth, solidifying its position as a leader in the Asia-Pacific region.
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