Knight Frank, one of the leading global consultants in India in their latest report Investments in Real Estate- trends in private equity investments in India (Q1 2022) have revealed significant growth in private equity (PE) investments in data centres in India.
Total PE investments in this sector are recorded at USD 2209 million in 2021, significantly higher by 259 per cent when compared to investments received in 2016. The sector commanded a 26 per cent share of all PE investments received by the real estate sector in India in 2021.
Approximately 96 per cent of the total PE investments in data centres since 2011 in India have been made by foreign investors.
Data centre growth in India has been significant over the last 5 years with investments from real estate players as well as from PE funds to set up various categories – from colocation, hyper-scale, and managed services to edge data centres and others.
Data centres took the second spot in the total investment share in 2021, beating warehousing and residential. While the focus has primarily been on metro and tier 1 city such as Mumbai, Chennai, Bengaluru, and Hyderabad, other areas such as Pune and Indore have also been of interest to investors, according to reports.
Recorded at USD 851 million, Mumbai has received the largest cumulative volume of investments since 2011 followed by Bengaluru at USD 427. Delhi received cumulative PE investments of USD235 million in Data Centres in the same period.
“In India, the current capacity of data centres in relation to the volume of data created is low, which lends scope for the creation of more data centres. Going forward, India’s growing reliance on digital payments, ever-increasing data consumption, and a surge in e-commerce usage would need enhanced digital infrastructure, making Data Centres a sunrise sector with high investor interest,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.
Increase in the total PE investments
The share of data centres in total PE investments in real estate in India has risen significantly from 2016 to 2021.
The total investment in five asset classes – office, residential, retail, warehousing and data centres was recorded at USD 8.4 billion (8,408 million). Of this total share of data centres was recorded at 26 per cent or INR 2.2 billion (2,209 million).
The significant rise in data generation and its consumption across a variety of industries has led to a steep rise in demand for data servers and data centres globally. According to Cloudscene data of 110 countries, as of January 2022, there were 8,347 data centres globally.
Of these countries, the top five house more than 50 per cent of the data centres: the United States (33.1 per cent), the UK (5.8 per cent), Germany (5.5 per cent), China (5.4 per cent) and Canada (3.9 per cent). India’s share in the total pie stands at 1.5 per cent.
Mumbai registered a sharp increase in data centre capacity in the Asia Pacific region, adding 56MW supply in the first quarter of 2021. Taking the total supply at 753MW, according to the Data Centre Report 2021, by Knight Frank. The report was published in partnership with the data centre research and analytics platform, DC Byte.
According to the report the pandemic influenced push for digital services resulted in an acceleration of new supply in 2020 with an additional 252MW or 50 per cent added to its development pipeline. This marked up the total supply to 697MW in the year 2020. Between 2016 and 2019, Mumbai’s IT power capacity increased from 148MW to 456MW.
Further, in Asia Pacific markets, total supply increased by about 200MW in Q12021, reflecting a similar pace to 2020 taking up recorded just over 800MW, making a total supply of 5800MW across the region.