Authored By- Siddharth Katyal, CEO, Bhumika Group
India’s digital transformation is advancing at an unprecedented pace, driven by a surge in artificial intelligence (AI), cloud computing, and big data analytics.
The country, with its burgeoning digital economy, has become a hotspot for data centre investments, which are expected to receive a whopping $3.8 billion in funding by 2026, according to JLL’s latest report. This infusion of capital is poised to reshape India’s commercial real estate landscape, creating lucrative opportunities for developers, investors, and tech companies alike.
The Role of AI in Fueling Data Centre Demand
Artificial intelligence is revolutionizing industries across the globe, and India is no exception. From retail and healthcare to finance and manufacturing, AI is driving innovations that require massive amounts of data to process and store.
The explosive growth of AI technologies, such as machine learning, deep learning, and natural language processing, has created an insatiable demand for data centres. These facilities, which house servers, storage systems, and other essential infrastructure, are essential to support the computational power required for AI algorithms to operate efficiently.
As organizations ramp up their AI initiatives, the demand for high-performance data centres is expected to skyrocket. The $3.8 billion forecasted investment in India’s data centre sector, as projected by JLL, is a direct response to this growth, highlighting the need for infrastructure that can keep pace with the country’s increasing digital consumption.
The rise of AI is particularly significant in India, where tech companies, government initiatives, and enterprises are driving digital adoption, making data centres critical to the nation’s digital economy.
India’s Data Explosion and Digital Economy Growth
India is currently home to over 800 million internet users, and that number continues to grow. As a result, the country’s data consumption is soaring, fueled by the widespread adoption of smartphones, digital services, and e-commerce.
The Indian government’s Digital India initiative has further accelerated this trend, with a push towards digitizing public services, financial inclusion, and the widespread use of mobile applications.
This surge in internet usage and data generation is creating immense pressure on India’s digital infrastructure. With businesses increasingly relying on AI, cloud computing, and big data, the need for scalable and reliable data centres has never been greater. JLL’s $3.8 billion investment forecast underscores this demand and signals the need for significant investments in data centre real estate.
Key Drivers of Investment Growth
Government Support and Policy Initiatives: The Indian government has recognized the critical role of data centres in supporting the digital economy.
The government’s Data Centre Policy aims to foster the development of world-class data centres, offering incentives for their establishment, especially in tier-2 and tier-3 cities. In addition, India’s regulatory focus on data privacy and protection creates a favorable environment for businesses to invest in secure and compliant data storage solutions.
Rising AI and Cloud Computing Demand: The growing use of AI across sectors such as fintech, e-commerce, and telecommunications is placing pressure on companies to scale their data storage and processing capabilities. Cloud computing, in particular, is transforming businesses by providing flexible, on-demand access to computing resources. With more companies embracing AI and cloud technologies, the demand for cutting-edge data centre infrastructure will only increase, making them a top investment priority.
Edge Computing Expansion: Edge computing, which involves processing data closer to its source to reduce latency, is becoming increasingly relevant as AI applications require real-time data processing. The growth of edge computing will lead to the expansion of data centres across more geographically dispersed locations, creating further opportunities for investment in real estate.
Renewable Energy and Sustainability: With sustainability becoming a focal point in global business, investors are increasingly looking for data centres powered by renewable energy. The trend towards green data centres is gaining traction in India, with several new developments incorporating solar and wind energy to meet growing demands while reducing carbon footprints. This shift aligns with the country’s commitment to achieving net-zero emissions by 2070.
JLL’s $3.8 Billion Investment Forecast
The $3.8 billion investment forecast for India’s data centres by 2026, as reported by JLL, will primarily be directed towards expanding the country’s existing infrastructure and developing new data centre campuses in key regions.
Cities such as Delhi-NCR, Mumbai, Bengaluru, Chennai, and Hyderabad are expected to see significant investments due to their status as hubs for both technology and real estate. These regions offer robust connectivity, access to renewable energy sources, and proximity to data-driven industries, making them ideal locations for large-scale data centre operations.
This capital influx will not only enhance India’s position as a data centre hub in Asia-Pacific but will also provide a significant boost to the commercial real estate sector. Data centres are emerging as high-value assets that offer steady, long-term returns, attracting both domestic and global investors. The investment growth will help drive the development of state-of-the-art facilities, supporting the increasing demand for cloud services, AI infrastructure, and other digital technologies.
Real Estate Developers Get Onboard
Real estate developers in India are already capitalizing on the boom in data centre demand. Leading developers such as Embassy Group, Brookfield, and Hines have entered the data centre space, with several large-scale projects in the pipeline. These companies are focusing on creating data centre parks that offer integrated solutions, including power backup, high-speed connectivity, and advanced cooling systems.
Developers are also embracing the potential of digital real estate, recognizing data centres as essential infrastructure for the digital economy. As AI and cloud computing continue to proliferate, data centre real estate will become an increasingly important segment of the commercial property market, offering stable revenue streams and long-term growth potential.
Conclusion
India’s data centre market is on the cusp of a major transformation, fueled by a massive $3.8 billion investment expected by 2026, as per JLL’s findings. The rise of AI, coupled with the country’s growing digital economy, is driving the need for cutting-edge data storage and processing infrastructure.
Real estate developers, investors, and tech companies are well-positioned to capitalize on this growth, which is reshaping the landscape of India’s commercial real estate sector.
As the digital transformation accelerates, India’s data centres will play an increasingly crucial role in enabling AI and cloud computing to thrive. The $3.8 billion investment will not only support the growing demand for data storage but will also redefine the future of India’s real estate market, creating a new era of digital infrastructure.