India's Data Center Surge to Spark $5.7 Billion Real Estate Boom by 2026


A recent JLL Research report indicates that the increasing adoption of Artificial Intelligence (AI) is set to significantly boost the data centre industry in India, which is projected to add 791 megawatts (MW) of capacity by 2026. This expansion will necessitate an additional 10 million square feet of real estate space and is expected to attract investments totaling $5.7 billion. As AI usage continues to grow, the demand for Indian data centres is forecasted to reach between 650 and 800 MW during the period from 2024 to 2026.

India is set to become the third-largest economy, with an anticipated GDP of $5 trillion by 2027. Its digital economy is expected to contribute around 20 percent. “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 advancing Artificial Intelligence (AI) is underscored by initiatives like the India AI mission, which aims to foster innovation, enhance workforce skills, and promote responsible and ethical AI deployment. The nation's data centre sector has demonstrated significant growth, expanding from 350 MW in 2019 to 854 MW in 2023, aligning with the surge in digital usage. The latest findings highlight that Cloud Service Providers (CSPs), pivotal in offering IT infrastructure systems primarily for data storage and computing power accessible through the Internet, have adjusted their requirements to accommodate the growing demand driven by AI technologies.

In Mumbai, the absorption rate nearly doubled during this period as CSPs renewed their pace of absorption. “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”, said Rachit Mohan, APAC Lead–Data Centre Leasing and Head-Data Centre Advisory, India, JLL.