CapitaLand India Trust Management Pte Ltd, the trustee-manager of CapitaLand India Trust (CLINT), will be investing Rs 1,940 crore to develop its third data centre in India, which will come up in Ambattur, Chennai. The company is acquiring a 4.01 acre freehold site for Rs 83.28 crore for the same.

The investments will be made in phases over the next four-five years. The data centre will have a power capacity of 55 megawatt (MW) to host customers such as global technology giants and cloud service providers, as well as large domestic enterprise clients. The acquisition of the site is expected to be completed by December 2022. The data centre is scheduled to be completed by end-2025.

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“With this latest acquisition, CLINT will have a presence in India’s key data centre markets. We will be developing a data centre in Navi Mumbai and another two data centres within our International Tech Parks in Bengaluru and Hyderabad. Our data centres will further enhance the quality of CLINT’s portfolio and deliver sustainable returns to unit holders,” Sanjeev Dasgupta, chief executive officer, CLINT, said.

When fully developed, the data centre will have the capacity to host around 4,900 racks, said Surajit Chatterjee, managing director (data centre), India, CapitaLand Investment (CLI).

Demand for data centres in India is rising due to improving technology infrastructure and increasing adoption of new technologies like 5G, artificial intelligence, cloud and the Internet of Things. These factors are expected to expand India’s total data centre capacity to 1,580 MW by 2026 at a compound annual growth rate of 22%. Chennai is India’s second largest data centre co-location market with current IT load capacity of 88 MW—about 12% share of India’s total capacity.

Last month, global private equity investor Blackstone announced the start of its data centre business in Asia from India, under Lumina CloudInfra, and laid down plans to scale it up to 600 MW over the next two years through presence in five locations of Mumbai, Chennai, Delhi-NCR, Hyderabad and Pune.

In India, Japanese firm NTT in May announced an expansion of its data centre footprint in India to 12 facilities, with more than 2.5 million square feet and 220 MW of facility power. Yotta Infrastructure—Hiranandani Group’s data centre business currently has two operational data centres—one in Greater Noida that it launched earlier this month, and another in Navi Mumbai, with a capacity of 160 MW each. Also, Nxtra by Airtel — a subsidiary of Bharti Airtel has plans to invest Rs 5,000 crore by 2025 to triple its data centre capacity to 400 MW.

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Reliance Jio is also understood to have plans for a 200 MW data centre campus with $950-million investment outlay in Delhi-NCR. In 2019, the Adani Group had announced a Rs 70,000-crore investment in this asset class. Brookfield and Everstone also announced multi-million dollar investments in data centres in India over the last two years.

“In the last five years, $14 billion has been invested in India’s data centre sector, and the amount is expected to cross $20 billion by 2025. CapitaLand’s strong core competencies in data centre design, development and operations will enable us to seize opportunities in the country as we build our new economy portfolio globally,” said Patrick Boocock, CEO (private equity alternative assets), CLI.