Real estate players eye data centres to create separate class of assets

Players such as Puravankara, Salarpuria Sattva in talks to develop data centres in top metros

As demand for data centres picks up in the county because of growing digital consumption, real estate players are eyeing this opportunity to create a separate class of assets.

While players such as Puravankara and Salarpuria Sattva are already in talks with data centre operators to jointly develop such assets, Embassy Group has started looking into the opportunity.

“We are talking to a data centre operator in Mumbai and jointly looking at land parcels in Mumbai and Chennai for development. In order to ride this wave, we are also open to developing captive data centres for IT companies,” said Vishal Mirchandani, chief executive officer (CEO), commercial and retail, Puravankara. The Bengaluru-based company says data centres would form at least 10 per cent of its commercial portfolio in a couple of years. It is looking at an investment of Rs 7,000-8,000 crore in the next eight years in the commercial segment .

 

Salarpuria Sattva, which has already constructed two data centres, one in Mumbai and another in Bengaluru, is looking to build more data centres in Mumbai, Bengaluru, Hyderabad and Chennai. “We saw a major digital drive for data centres in the aftermath of the Covid-19 pandemic. Work-from-home (WFH) compulsions, online education, online medical consultations, e-commerce increase, video conferencing, and webinars are growing. All these factors have led to a growing demand for the use of data centres,” said Mahesh Khaitan, director, Salarpuria Sattva group.

According to a Colliers International report, through August 2020, overall private equity inflows into Indian real estate stood at $866 million, of which around 46 per cent was pumped in the data centre segment.

On an average, Indian mobile data users consume 8.3 GB of data every month, compared with 5.5 GB for mobile users in China. The government’s data localisation law emphasising the creation of a cloud warehouse, is propelling demand for data centres that offer robust, scalable applications and storage services to individuals or businesses following their demand for cloud and big data storage, adds the report.

 

“Data centres are long term leases that are heavy on investments and it’s a source of fixed income. It’s a safe investment bet,” said Thirumal Govindraj, managing director, RMZ Corp, which is also talking to clients for data centre opportunities.

Hiranandani Group, which has set aside Rs 3,500 crore to set up data centres across the country over the next couple of years, had in July unveiled a Rs 1,000 crore facility spread across 20 acres in Mumbai. The Adani Group had also partnered with San Francisco-based Digital Realty last year to develop mega data parks with Rs 70,000 crore investments in India.

According to a Million Insights report, the global data centre networking market may touch $41 billion by 2025, and register an 11 per cent CAGR from 2019 to 2025.

Indian real estate PE investments*

• Total inflow: $866 million
• Data centres: 46%
• Office space: 24%
• Industrial & logistics: 12%
• Hospitality: 9%
• Residential: 8%
• Coliving: 1%

*For 2020, through August

Source: Colliers International