CapitaLand, Shapoorji Pallonji's PE arm to foray into data centre business

Such centres to witness $5 bn in investments till March 2025 and increase threefold in capacity: Crisil report

Some of the big investors/developers such as Singapore-based CapitaLand and Shapoorji Pallonji’s private equity arm are looking to foray into data centres to tap the growing demand for such properties.

CapitaLand is planning to set up a data centre in Chennai, said sources, adding that it is in advanced stages to buy a five acre land in the Ambattur area of the city where an acre costs Rs 12 to Rs 15 crore.

“It wants to set up data centres in major cities of the country and metros will be the initial focus,” said sources. 

A mail sent to CapitaLand did not elicit any response.

The developer is also looking to buy land in Navi Mumbai in Mumbai, said sources in the know.

In India, CapitaLand has over 20 business and IT parks, industrial, lodging and logistics properties across seven cities — Bengaluru, Chennai, Goa, Gurugram, Hyderabad, Mumbai and Pune.

This includes 17.9 million square feet of commercial space, comprising business and IT parks, industrial and logistics properties as well as seven lodging properties with more than 1,200 units under Ascott.

Shapoorji Pallonji Investment Advisors is also looking to get into the segment, said a source. 

It added that the fund manager is already talking to some of the big investors to raise funds for the venture.

“We have one of the most accomplished data centre implementation companies in Sterling Willson within the SP group ecosystem. It has already delivered tier-IV certified data centres in India. We plan to leverage this expertise to establish a data centre delivery platform focused on the region to serve the needs of both hyperscale as well as co-location clients,” said Rajesh Agarwal, chief executive officer (CEO) and managing director (MD) of  SP Investment Advisors.

In 2018, Shapoorji Pallonji’s PE arm sold an IT park in Chennai to Mapletree Investments for Rs 2,400 crore.

Data centres, which have seen a massive growth on the back of data localisation diktats amid the pandemic, will witness $5 billion in investments till March 2025 and a threefold increase in capacity, a report by Crisil Research said recently.

The overall capacity, which is measured by the amount of power they consume, stood at 360 Mw as of March 2020. It is expected to surge to 1,100-1,200 Mw by the end of March 2025 after investments of $5 billion, the report said.

Already, developers such as Hiranandani, Puravankara, DLF and others have set up ventures for data centres.

The Hiranandani group plans to invest around Rs 8,500 crore over the next three years to develop data centres and industrial parks across various cities.

DLF, the country’s largest developer, has got into this segment. It is investing Rs 130 crore to develop a data centre in Noida, a report had said last year.

“There are multiple factors driving demand for data centres in India – digitisation, Covid-induced life at home, data localisation laws, falling data prices and increasing mobile and Internet penetration.”

“Hence, demand-side factors are very promising. Supply is currently limited to a few players as design and operations of a data centre are highly specialised.” 

“This is what the new players have to keep in mind before entering the sector,” said Nitin Gupta, MD at Macquarie Capital.