South India’s data centre market is on a growth trajectory, with major cities like Chennai, Bangalore, and Hyderabad at the forefront, according to a Colliers India report. This surge is supported by substantial government incentives, strategic infrastructure investments, and a rising demand for digital services. The region will play a crucial role in the global data centre landscape, with capacity projected to grow 65 per cent by 2030.

The report stated that the combined installed data centre capacity in Chennai, Bangalore, and Hyderabad is approximately 200 MW. This foundation is set to be bolstered, with 190 MW currently under construction and an additional 170 MW planned. These developments will increase the total capacity by 80 per cent over the next few years, underscoring the region’s strategic importance in supporting global digital infrastructure.

Chennai is a prime data centre hub due to its strategic coastal location, offering submarine cable connectivity, according to the report. The city has an installed capacity of 87 MW, with 156 MW under construction and 104 MW planned.

“Chennai data centre market exemplifies the city’s commitment to technological advancement and innovation. With its strong government initiatives concerning the Industrial Policies and sector-specific Policies for Data Centres including Cyber Security, followed by the support infrastructure facilities and availability of developable land parcels at low cost, Chennai will continue to drive and lead the digital economy forward,” said Umakanth Y, Senior Director, Advisory Services, Colliers India.

Bangalore currently has an installed capacity of 79 MW, with 10 MW under construction and 26 MW in the planning stages. Bangalore’s technological prowess and availability of skilled workforce are key drivers for its growing data centre market, states the report.

Hyderabad, on the other hand, has an installed capacity of 47 MW, with 20 MW under construction and 38 MW planned. The city’s competitive real estate market and robust infrastructure are significant advantages.

The Colliers report also mentions that state governments in Tamil Nadu, Karnataka, and Telangana have been instrumental in providing subsidies on land acquisition, reduced power tariffs, and significant tax breaks to make South India an attractive destination for data centre investments. There have also been investments in power and telecommunications infrastructure, ensuring high-speed, reliable connectivity, a critical component for data centre operations. Alongside, simplified regulatory frameworks and expedited approval processes reduce bureaucratic hurdles, encouraging swift project initiation and completion.

According to recent data, BFSI dominates the market, accounting for nearly 35 per cent of total occupancy. IT firms follow with 30 per cent, while Hyperscalers occupy 20 per cent and other sectors constitute the remaining 15 per cent.

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