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The city possesses diverse investment opportunities like commercial, residential, co-living properties, and many more. Of all these investment options, data centers that fall into commercial properties are leading the markets and driving the city standards into higher strata. Recently, Chennai has bagged a position in the top 10 cities to watch for globally, according to a report by Cushman and Wakefield’s 2021 Global Data Center Market Comparison. The other cities on the list are Nairobi, Stockholm, Cape Town, Moscow, Athens, Abu Dhabi, Santiago, Kuala Lumpur, and Vienna.
The global commercial real estate services firm Cushman and Wakefield have conducted a study that evaluated almost 1,189 Data Centers worldwide to arrive at the report. The firm considered 48 global markets before arriving at the overall Top 10 markets.
Chennai currently holds 12 data centers and is estimated to be of a capacity of approximately 70 MW. According to a report by global real estate consultancy Knight Frank, this is anticipated to grow to a massive degree of 174MW by 2023, more than double in a couple of years.
Also Read: Chennai Real Estate: A Panoramic Scenario
Reasons for Data Center Boom in Chennai
The prime reason for the data center market boom is the increased digitization pace that increased the various companies’ reliance on data storage spaces. This is attracting heavy investments from the vast players of the industry. Almost investments amounting to Rs.8,300 crores by large companies, namely Yotta Infrastructure of Hiranandani group, HDCI Data center Holdings, and a Singapore-based company, have been made in the last year 2020. The astounding fiber optic connectivity with four undersea cable landing stations is bolstering the establishments.
The large IT offices, hyperscalers, and enterprises are driving the demand for data centers. Ambattur and Siruseri micro markets have evolved as the data center markets with the tech giants like Adani, Netmagic establishments in these areas. Chennai is the closest point in India to South East Asia that ensures good global connectivity. The coastal region holds the scope for the new cable landing stations that best support the data centres.
Promising Chennai Commercial Real Estate
Chennai, the capital city of Tamil Nadu, has emerged as a real estate hotspot due to the IT hub that best buttresses the city’s commercial real estate sector. Chennai has witnessed a 4.5 million sq. ft. of office space absorption in the year 2020 despite the stalling markets due to the pandemic. The upcoming projects like Chennai Metro, the Road Development program, and the International Airport’s up-gradation are anticipated to elevate the city’s commercial real estate status. These projects develop the areas in the vicinity of the projects and increase the connectivity, which is expected to escalate the properties’ worth and scale up the investments. Chennai’s commercial Real Estate hence seems promising.
Also Read: Chennai Market forecast
Data Center for real estate investors 2022
Institutional investments in Indian real estate are likely to revive in 2022, owing to low interest rates, continuing monetary stimulus, improved income visibility across asset classes, and inclusive growth policies.
The year 2022 is predicted to surpass the $5 billion threshold, which was achieved yearly by Indian real estate between 2017 and 2020. Due to major portfolio transactions totalling $3.2 billion in the fourth quarter of the year, institutional investments surpassed the $5 billion threshold in 2020. The year 2021, on the other hand, saw greater board-based recoveries, with 31 agreements in the first nine months compared to 19 in the same time in 2020.
Annual investments in 2021 are likely to be in the $3.8–4 billion area, unless several big portfolio agreements are not signed before the end of the year. Apart from the office sector, investors also put money into the residential sector, which has made a strong comeback, while warehouses and data centres have remained popular. Capital commitments were made in the retail sector through investment platforms, indicating that investors are optimistic about the industry’s development potential.
The industry is rapidly recovering and returning to pre-pandemic levels. While the market continues to recover, it will not be a straight line across asset classes as each returns to normalcy.
In 2022, the office sector is expected to have a 30-35 percent year-over-year increase in net absorption, although it will still be well below the highs of 2019.
In 2022, the Indian data centre sector is expected to build a record-breaking 277 MW of capacity, needing 3.2 million square feet of real estate space. Parallel trends of efficient energy consumption, renewable energy investments, DC-ready trained people, and the expansion of data-driven emergent industries will result from the enormous increase.
Chennai stands at the second position after Mumbai in the Indian Data Center Market. The potential of Chennai to emerge as a data centre hub is best exemplified by the growing investments in the data center market. The developed infrastructure like cable landing stations, IT offices, and industries’ demand for data storage has pushed up the limits to go further and beyond. This has placed the city in the top ten markets to watch for globally. This news brings cheer to the investors in this area and also anticipates an influx of further commercial real estate investments in this city.
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FAQs:
Chennai, the capital of Tamil Nadu, is one of the real estate hotspots of the country. Due to the IT corridor, the real estate has scaled up and is expected to go further due to the upcoming infrastructure projects. So, the city markets are the best place to invest in.
Chennai has featured on a global list of top ten cities to watch for, according to a renowned Real Estate services firm Cushman and Wakefield. So, investing in the data center in Chennai would be one of the best decisions.
The digitization in the economy and the forced shift to the online processes during the pandemic has increased the data storage space’s dependency. This created the demand for the data centers.
The infrastructure development and the connectivity and cable landing stations in the city are the prime reasons for the data center boom in the city. Also, the IT and the e-commerce industry are the biggest consumers supporting the data center establishments.
