India's data centers capacity poised to double every couple of years

India, which generates about 20 percent of the world's data, is expected to see data center capacity doubling every couple of years from here on.

A data center is typically a large group of networked servers used by organizations for the remote storage or distribution of large amounts of data.

Anshuman Magazine, who heads India operations in South-East Asia, the Middle East, and Africa, for commercial real estate services and investment firm, CBRE, spoke to ANI, here in New Delhi. He shared his views on a wide range of topics, including data center trends in India, rising 'ghost malls', and why are global players setting up Global Capability Centres in India.

Asked whether India is a fertile ground for setting up data centers, he agreed and asserted that data center capacities here in India will only double every year or two.

"It has only started (in India), and every year or two we will double our capacity in data centers, going forward. Data centers need a lot of power, they need a lot of water, and they need a lot of capital, and that's why the speed is slow. But we will still double our capacity every few years going forward," Magazine said.

In a quick follow-up, he was asked whether he sees global players coming to India and setting up data centers here in India. Anshuman Magazine said that they are already doing that.

"Not just in data centers. Global players will come in manufacturing, data centers, office, retail, every segment as the GDP and consumption increase," he added.

On slow growth in data centers in India, he explained that the problem in this segment is that it's capital intensive, so everybody doesn't step in.

"It's not like a warehouse that you can build (easily)," he said further.

In a recent report published by CBRE South Asia, it noted that India topped major Asia Pacific countries with the highest data center capacity of 950 MW, excluding China. The report said that India overtook major countries like Australia, Hong Kong SAR, Japan, Singapore, and Korea.

Moreover, it forecast India is likely to record the highest capacity addition of 850 MW during the 2024-2026 period, higher than major Asia Pacific countries.

Data localization plans are expected to trigger investments in data centers, besides incentives by various states to attract investments.

Coming back to Anshuman Magazine, he was asked about the latest trends where several Global Capability Centers of large global corporations are coming to India.

Why is this happening and why is India at an advantage?

According to Anshuman Magazine, the two main reasons are skilled human resources and low costs.

"Earlier it was only cost, but now it's skilled manpower. Most of the countries do not have that...But there are certain sectors in technology, let's say cyber security and so many other things where there are not enough people to deliver. In the West, they just don't have that many skilled people. They don't have that many PhDs or engineers," he said, explaining India's edge in GCCs.

He also noted that India has already become a well-established offshoring destination in the world.

"We (India) have been doing this for many years and we had delivered quality work at a low cost for many years. So now most of these companies do not have a choice but to come and expand."

Bengaluru, Hyderabad, Gurgaon, and Pune are some of the cities which are eyed for GCCs. Chennai also has a few GCCs.

Asked to give an outlook for the next decade, he said one decade is too long but he is positive about the sector.

"One decade is too long in today's time. How the globe works, you can't predict for 10 years because there's so much disruption, technology changes happening, population, conflict, whatever. But India will definitely do well for next 10 years and will grow because we are so behind, you know, and so much happening," he said.

"We have the skilled manpower, we have the right, hopefully policies. India is finally, is one of the last countries left on the planet which has 1.4 billion, 1.5 billion people, but more importantly, millions of new people coming in whose income levels are rising. So the consumption in India will go on for next 30 years."

During his interaction with ANI, he also touched upon the issue of rising 'ghost malls'. Commercial real estate largely has two segments -- office and retail.

"Office is doing really well. In retail segment, see there will be always be certain parts of locations that will not do well. Be it in any category," he said, adding that however the country's retail sector is "completely under supplied".

"We have 1.4 billion people. The amount of retail space we have is less than Dubai, which is one city, or less than Bangkok I would say...India's purchasing power still has to go up. Per capita income is still low."

As per definition, ghost malls are shopping centers, typically having a high vacancy rate and low consumer footfalls.

In 2023, there has been a sharp rise in low-performing shopping malls with approximately 13.3 million square feet of retail space categorized as 'ghost shopping center', a 59 percent year-on-year surge, as per a recent report.

He added that there has been a lack of feasibility study and developers tend to build spaces and later realizes that area cannot absorb that space.

"...you have to look at what can the local market absorb. So if you have a population, let's say 5 million people, right. So you think, okay, 5 million is a big number. But out of the 5 million, if only 50,000 have the paying capacity and you develop a 1 million sqft mall, it will not run. So the so-called ghost malls are because of that. A lot of them are not properly designed. There's no theme. Nobody has done a detailed feasibility that how should that mall be there."

He suggested emphasis on expertise, feasibility study, and constant management to make a mall business successful.