The Data centre (DC) industry in India, projected to add 791 MW capacity by 2026, will drive a demand for 10 million sft of real estate space, attracting investments worth $5.7 billion, commercial real estate, and investment management company, JLL India said in its research report.

The surge, primarily fuelled by an increasing adoption of Artificial Intelligence (AI), will lead to surge in demand for Indian DCs in the range of 650-800 MW, during 2024-26. While exponential growth in computing power and the resulting new applications will drive demand for DC industry over the medium term, JLL India said in an official release.

Cloud Service Providers (CSPs), who essentially offer IT infrastructure systems primarily for data storage and computing power accessible through the Internet, have realigned their requirements to factor in AI-led demand. The CSPs have also announced higher investments to scale up AI-led growth.

“The exponential growth in processing power and data volumes, driven by AI, necessitates the development of new data centers capable of meeting energy, processing, and cooling needs. The anticipated expansion and progression of diverse AI disciplines are projected to create additional demand for data centers, expanding their capacity requirements and advancing their capabilities,” said Rachit Mohan, Head - Data Centre Advisory, India, JLL.

According to the report, during the second half of 2023, there was a 12 per cent increase in absorption to 81 MW compared to 72 MW during the same period last year. This growth can be attributed to CSPs gaining momentum after a brief hiatus during the first half of 2023.

“India is poised to be the third-largest economy, with a projected $5 trillion GDP by 2027 with digital economy contribution of around 20 per cent. This digital expansion is anticipated to propel the growth of India’s data centre industry, projected to increase from 853 MW in 2023 to 1,645 MW by 2026. This increase in capacity will require an investment of $5.7 billion, and around 10 million sft of real estate,” said Dr Samantak Das, Head - Research and REIS, India, JLL.

The country’s DC sector expanded from 350 MW in 2019 to 854 MW in 2023, in line with the increasing digital usage trends.