In their latest report on trends in corporate capital expenditure (capex), analysts at Spark Capital Research pointed out that data center capex is emerging as a new mega theme in India. Increased adoption of the cloud amid a growing preference for a hybrid work model has led industries such as banking and financial services, retail, healthcare and e-commerce to invest in data centers, the report said. Furthermore, telecom companies preparing for the rollout of 5G are also poised to increase their investments in data centers as data usage is expected to increase.

 

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Spark Capital analysts added that data center spending derivatives should be visible in increased demand for switchgear, substation/transformers, building management systems, cooling solutions and generator sets. Thus, companies engaged in making these items make a profit.

Another beneficiary of this emerging trend would be real estate, especially in metro cities. Interestingly, Adani Group, Japan’s NTT and Hiranandani Group are companies looking to expand their data center presence in India in Noida, Pune, Delhi and Mumbai. These companies have recently announced new investments for this purpose.

“Mumbai’s strategic location, a coastal city and access to submarine cable landing destinations, makes the city a ripe choice for data centers,” said Viral Desai, national director, occupier services at Knight Frank India.

“Chennai also serves as a data center for other nearby South Indian cities. Delhi-NCR, Hyderabad and Bengaluru are other locations where interest has increased as many major IT companies are headquartered in India in these cities,” Desai said, pointing out that data centers are a new segment in real estate. estimated to contribute to 5-10% of the total absorption of commercial real estate in each market.

“From an investor’s point of view, data centers are long-term stable assets that can provide stable and secure returns over long periods of time (20-30 years). The segment is already witnessing investments from global funds such as Brookfield, Blackstone, ESR and Capitaland,” he said.

Another real estate advisor, JLL India, estimates that India’s data center industry will double its capacity and surpass the 1 gigawatt mark by 2023. According to JLL India, global investors and data center companies have ramped up their commitment in the past six months by announcing joint ventures with operators. to set up sites. Their $3 billion investment commitments highlight the growth potential of this asset, the real estate consultant said in his recent report.

https://www.livemint.com/market/mark-to-market/data-centre-capex-is-emerging-as-a-new-theme-among-india-inc/amp-11632244209166.html