Data Center Expansion Sparks $5.7 Billion Real Estate Surge By 2026: Report

India is on the brink of becoming the third-largest economy, boasting a projected GDP of $5 trillion by 2027, with the digital economy contributing approximately 20 per cent to this growth

India's data centre sector is likely to expand its capacity by 791 megawatts (MW) by 2026, propelled by the surging adoption of Artificial Intelligence (AI). This expansion is forecasted to necessitate an additional 10 million square feet of real estate space, drawing investments of $5.7 billion, according to a report released on Friday.

With the accelerating adoption of AI, the requirement for data centres in India is forecasted to range between 650 and 800 MW from 2024 to 2026, as outlined in the JLL Research report. India is on the brink of becoming the third-largest economy, boasting a projected GDP of $5 trillion by 2027, with the digital economy contributing approximately 20 per cent to this growth.

“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 approximately 10 million square feet of real estate,” said Dr Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.

India's commitment to AI is evident through initiatives like the India AI mission, which aims to drive innovation, enhance workforce skills, and ensure AI technology's responsible and ethical use. The country's data centre sector witnessed substantial growth, expanding from 350 MW in 2019 to 854 MW in 2023, mirroring the upward trajectory of digital usage trends, as per the report.

The report indicates that Cloud Service Providers (CSPs), primarily offering IT infrastructure systems for data storage and computing power over the Internet, have adjusted their strategies to accommodate the increasing demand driven by AI. In Mumbai, absorption rates nearly doubled during this period, reflecting the heightened pace of CSP activity.

“The exponential growth in processing power and data volumes, driven by AI, necessitates the development of new data centres capable of meeting energy, processing, and cooling needs,” remarked Rachit Mohan, APAC Lead–Data Centre Leasing and Head-Data Centre Advisory, India, JLL.