This property is proof of a pandemic

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Data center space demand is likely to grow by about 15-18 msp in major cities in India over the next five years.

ABOUTDespite adversity, 46-year-old technology entrepreneur Sridhar Pinnapureddi has been successful. In the early 2000s, his Internet service business, Pioneer Internet, failed and suffered losses. “There was an urgent need to carve out a niche in order to either stand out or die,” he says. Forbes India… In 2005, he intuitively envisioned that data centers, which were then primarily used by websites, would become the future centers of the economy.

Pinnapureddi and his executive team traveled to the United States to examine the data centers there, and realized that there is not a single Tier 4 data center in India. Tier 4 data centers, contrary to popular belief, should be of the highest quality, with fully resilient design, continuous cooling, 99.995 percent expected uptime and no more than 26.3 minutes of downtime per year. A Tier 1 data center is basic and offers the customer little complexity beyond 99.67% uptime.

In February 2008, CtrlS, a company founded by Pinnapureddi, built India’s first Tier-4 data center in Hyderabad. In 2011, CtrlS launched Asia’s largest hyperscale Tier 4 data center in Mumbai, followed by others over the past decade.

Pinnapureddi could not have made his act more correct. Over the past decade, explosive growth in data consumption, the introduction of cloud services, 5G technologies and artificial intelligence in India has meant an increase in demand for hyperscale data centers. But India has only 0.2 MW of data centers per 100,000 people, compared to 8 MW in the US.

Data localization has also been one of the key drivers of data center development in India. In 2018, the Reserve Bank of India (RBI) urged payment system providers to store payment data in India. The draft personal data protection law, which is being discussed by a joint parliamentary committee, points to the need for data storage in India. A September 2020 JLL report notes that Indian data center capacity is expected to nearly triple to 1,078 MW by 2025 from 375 MW last year, representing an investment opportunity of $ 4.9 billion per this period.

Pandemic-proof property?
Data centers were among the properties least affected by the pandemic crisis, according to a survey of Savills Research data centers. Data center space demand is likely to grow by about 15-18 million square feet (msf) in major Indian cities over the next five years.

All of this has resulted in a rapid increase in the number of data center companies that manage these assets. Hyderabad-based CtrlS operates six ranked 4 hyperscale data centers in India, covering an area of ​​approximately 1 msp. The company’s expansion plan includes the construction of 6 square meters of data center area with a capacity of about 700 MW. “In Mumbai, we are building a 2 square meter datacenter park with a capacity of 300 MW; Hyderabad with 300 MW and Chennai with 100 MW, ”says Pinnapureddi.

CtrlS, which has customers including Walmart, Exxon, Disney, FedEx and Panasonic in addition to Etisalat, Emirates and SBI, is now looking at edge data centers — smaller data centers closer to the end user — as the next growth opportunity. CtrlS will build 16 of these as regional data centers.

NTT Global Data Centers and Cloud Infrastructure, which is the Indian region of NTT Global Data Centers, operates 10 data centers in Mumbai, Delhi, Chennai and Bangalore. The Hiranandani Group also embarked on a foray into this fast-growing area after realizing the value proposition it was proposing and the supply shortfall, its group CEO Darshan Hiranandani told Forbes India.

Hiranandani has built Yotta NM1, a large, hyperscale Tier 4 data center in Panvela that offers co-location, connectivity and cloud services to multiple technology companies. He adds that their upcoming projects include the Yotta data center park in Chennai (four data centers), which will begin construction in early January 2022, and Delhi (six of them), without disclosing a timeline.

The group also has plans to establish a center in West Bengal as part of a Rs.8,500 investment over the next three years in data centers and industrial parks in various states in India. Hiranandani declined to say how many data centers will be built each year. “India’s East and Northeast Belt offers tremendous storage opportunities,” he adds.

CtrlS is now looking at building edge data centers — smaller data centers closer to the end user — as the next growth opportunity.

Both Hiranandani and CtrlS declined to discuss the financial performance of their businesses. But building quality data centers isn’t cheap. Unlike other real estate properties, there are too many variables involved in quality assurance assurance, scope of work, construction costs, bandwidth costs, and data center design. Analysts say the base price of land can start at 18,000-20,000 won per square foot.

Globally, the number of large data centers operated by hyperscale providers has doubled to 597 in 2020, up from the previous level in 2015, according to media reports based on a Synergy Research study. Together, Amazon, Microsoft and Google account for more than half of all major data centers.

Despite demand, it is unlikely that there will be a gold rush in this niche but fast-growing area. This would mean that only seven or eight large enterprises offering premium services will survive in the coming years.

Click here to see Forbes India’s comprehensive review of the Covid-19 situation and its impact on life, business and the economy.

(This story will appear in the July 2, 2021 issue of Forbes India. You can buy our tablet version at Magzter.com… To visit our archive, Click here.)

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