look news india
The real estate market of the National Capital Region (NCR) is going through a historic transformation these days. While till now big real estate developers and investors used to buy land only for luxury housing societies, malls and commercial office space, now a new and highly profitable trend has emerged in the market—Acquisition of land parcel for data center. Global tech giants and hyperscale data center operators are investing billions of rupees to buy land in Delhi-NCR due to the Artificial Intelligence (AI) revolution, 5G network expansion, cloud storage and stringent government regulations related to data sovereignty. In this series, there is a competition for land deals worth more than Rs 100 to 110 crore on strategic corridors like Gurugram, Manesar and Greater Southern Peripheral Road (Greater SPR).
Why did Gurugram and Manesar become the first choice of data center giants?
Gurugram and IMT Manesar, established as the country’s top industrial and IT hubs, are now fast emerging as key digital infrastructure corridors of North India. Setting up any modern Tier-3 or Tier-4 data center requires three basic things: uninterrupted heavy power supply, multi-path network of optical fiber cables and vast land protected from natural disasters.
The area of Manesar and New Gurugram completely meets all these technical parameters. The area is directly connected to Indira Gandhi International Airport (IGI Airport) due to the connectivity of Delhi-Jaipur Highway (NH-48), Dwarka Expressway and Kundli-Manesar-Palwal (KMP) Expressway. Additionally, the IT and data center policies of the Haryana government and the availability of dedicated 24×7 high-voltage sub-stations by power distribution companies have made this belt a preferred destination for investors.
Historic rise in land prices and mega deals worth Rs 110 crore
Data center developers typically require large land parcels ranging from 5 acres to 20 acres or more and with clear title. Due to limited availability of land and high demand, per acre land prices in prime industrial and commercial zones have reached record highs.
Transactions and valuations ranging from Rs 100 crore to Rs 110 crore are being seen for large institutional and data center land parcels around Greater SPR Road and Manesar Industrial Cluster. While farmers and original land owners are getting compensation and returns worth crores in exchange for their strategic lands, it is proving to be a new ‘gold mine’ of earnings for real estate consultancy firms and land owners.
Aggressive entry of hyperscalers and cloud companies
In the NCR market, Bharti Airtel’s Nxtra, Anant Raj Cloud, Yotta, STT GDC and several multinational hyperscalers have already set up their massive data center facilities or are rapidly expanding their capacity.
Global cloud service providers like Microsoft, Google and AWS are continuously increasing their capacity to process and store data of Indian corporates, banking and financial sector (BFSI) and government undertakings within the country’s borders. The need for large campuses with high-density racks and state-of-the-art liquid cooling for AI workloads has accelerated this demand manifold.
New asset class for real estate sector: long leases and stable returns
According to real estate experts, data centers have now become a more secure and attractive asset class than traditional office rentals. While office space remains uncertain due to tenant movement and work-from-home, data center deals come with long lock-in periods of 15 to 25 years.
Data center operators invest heavily in building highly customized infrastructure, allowing them to remain in one location for long periods of time. That is why institutional funds, private equity firms and large real estate developers are now reserving a large portion of their portfolio for the development of data center parks.
What will be the digital real estate future of NCR in the coming years?
India’s data center industry is poised to attract investments of over $4.5 to 5 billion in the coming 3 to 5 years. After coastal cities like Mumbai and Chennai, Delhi-NCR is the largest data consumption center of North India.
As the use of smart cities, autonomous vehicles, fintech and generative AI increases, the demand for data storage and computing capacity will increase manifold. This corridor from Gurugram to Manesar and Sohna will emerge as the biggest engine of digital transformation of the country in the coming decade.