Parul
Leading global consultant in India, Knight Frank, in their latest report Investments in Real Estate- trends in private equity investments in India (Q1 2022), reported a significant growth in private equity (PE) investments in data centres in India.
Total PE investments in this sector is recorded at US$ 2209 mn in 2021, significantly higher by 259 per cent when compared to investments received in 2016. The sector commanded a 26 per cent share of all PE investments received by the real estate sector in India in 2021.
Approximately 96 per cent of the total PE investments in data centres since 2011 in India have been made by foreign investors.
Table 1: Investment in Data Centre (2016 – 2021) in US$ Mn
| Year | Investment in US$ mn |
| 2016 | 616 |
| 2017 | — |
| 2018 | 450 |
| 2019 | — |
| 2020 | 396 |
| 2021 | 2,209 |
Data centre growth in India has been significant over the last 5 years with investments from real estate players as well as from PE funds to set up various categories – from colocation, hyper-scale, and managed services to edge data centres, etc. Data centres took the second spot in the total investment share in 2021, beating warehousing and residential.
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While the focus has primarily been on metro and tier 1 cities such as Mumbai, Chennai, Bengaluru, and Hyderabad, other areas such as Pune and Indore have also been of interest to investors. Recorded at US$ 851 mn, Mumbai has received the largest cumulative volume of investments since 2011 followed by Bengaluru at US$ 427. Delhi received cumulative PE investments of US$ 235 mn in Data Centres in the same period.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “In India, the current capacity of data centres in relation to the volume of data created is low, which lends scope for the creation of more data centres. Going forward, India’s growing reliance on digital payments, ever-increasing data consumption, and a surge in e-commerce usage would need enhanced digital infrastructure, making Data Centres a sunrise sector with high investor interest”.
The share of data centres in total PE investments in real estate in India has risen significantly from 2016 to 2021. The total investment in five asset classes – office, residential, retail, warehousing and data centres was recorded at US$ 8.4 billion (8,408 mn). Of this total share of data centres was recorded at 26 per cent or Rs 2.2 bn (2,209 mn).
Table: Share of asset class wise PE Investments 2016 – 2021
| Year | Office | Retail | Warehousing | Residential | Data Centres |
| 2016 | 24% | 11% | 2% | 51% | 11% |
| 2017 | 34% | 9% | 29% | 28% | 0% |
| 2018 | 51% | 3% | 24% | 17% | 5% |
| 2019 | 49% | 14% | 27% | 11% | 0% |
| 2020 | 58% | 5% | 20% | 8% | 9% |
| 2021 | 34% | 10% | 16% | 14% | 26% |
The significant rise in data generation and its consumption across a variety of industries has led to a steep rise in demand for data servers and data centres globally.
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According to Cloudscene data of 110 countries, as of January 2022, there were 8,347 data centres globally. Of these countries, the top five house more than 50 per cent of the data centres: the United States (33.1 per cent), the UK (5.8 per cent), Germany (5.5 per cent), China (5.4 per cent) and Canada (3.9 per cent). India’s share in the total pie stands at 1.5 per cent.
