Demand for Realty Space to Build Data Centers on the Rise

2 May 2016 by Technology

"MUMBAI: With rising growth of ecommerce and internet-based businesses in India, the country is logging a growth rate of 25-30% for third-party or co-location data centers, which is spurring demand for real estate space for setting up these hubs in cities such as Bengaluru, Mumbai, Delhi, Chennai, Hyderabad, Pune and Jaipur.

But despite the demand, property consultants are finding it tough to get the right premises and buildings that can cater to the requirements.

Currently, India leads in Asia with 105 Co-location Data Centres, and considering the business being generated domestically and by foreign players, the numbers are expected to rise exponentially.

""If we analyze the industry, around 75% of the generated revenue comes from local providers, but there is also constant consolidation happening in this sector. An approximate 40 million square feet will be added to the global data centre market by the end of 2017 -- and interestingly, a significant part of this will come in the Asia Pacific region, which currently contributes around 25% of the global market,"" said Piyush Gandhi, National Director - Project & Development Services, JLL India.

The data centres industry faces challenges on multiple fronts, including specific real estate requirement. The requirements for data centre buildings, including mechanical and electrical provisions, are extremely specific and high and developers need to be able to deliver accordingly. ""Data centres need high intensity and stability of power supply, this factor is of paramount importance. The slab loading capacity for a typical Data Centre building can go up to 1,500 kg per square metre, which is ..

Colocation or third party-leased Data Centres are specialized projects where servers, equipment, managed space and bandwidth are available on rent to wholesale or retail customers that are in need of such customized solutions. These have become very popular among fast-growing companies operating Internet-based businesses and are driving the growth of this industry.

Given the specific requirements, premises where Data Centres can be developed are very limited and if the building has to be developed from scratch, the overall project timelines are considerable. The broad range of construction costs for a Data Center (fit-outs) would be in the range of about Rs 10,000-18,000 per sq.ft. carpet area. This is in addition to the cost of developing the base building, IT equipment and telecommunication systems, he added.

The third-party Data Centre market is growing exponentially both internationally and in India. According to recent report from global information technology analyst firm 451 Research, the annualized revenue of the Data Centre colocation market is projected to reach $36 billion worldwide by end of 2017. At present, this market is worth around $25 billion.

By: Kailash Babar, ET Bureau

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