The Digital Backbone
Every time you stream a video, make a UPI payment, or upload a photo to social media, that data physically resides somewhere. Data centers house the servers, storage systems, and networking equipment powering India's digital economy. Think of them as the warehouses of the internet age—but instead of storing physical goods, they store, process, and transmit digital information.
For real estate professionals, data centers represent a unique asset class. They combine the footprint of industrial facilities, the returns of critical infrastructure, and the complexity of power plants. Understanding them requires unlearning what you know about traditional commercial real estate.
The Physical Reality: What Makes These Buildings Different
A mid-sized data center occupies 200,000 to 500,000 square feet—comparable to a logistics warehouse. But the similarity ends at square footage.
Power: The Non-Negotiable Filter
Office buildings need 5-10 watts per square foot. Data centers demand 150-300 watts per square foot. Next-generation AI facilities push higher still. A single 100 MW facility consumes as much electricity as 800,000 Indian homes simultaneously.
You can't build where power doesn't exist. Data centers must locate within the proximity to electrical substations delivering 50-100 MW continuous. Most commercial land in India fails this test immediately.
The Other Requirements
65% of the building is climate-controlled server halls with 18-foot ceilings—double what offices need—to accommodate raised floors and overhead infrastructure. These halls carry six times the weight of conventional buildings: 2,500 kg per square meter to support dense server equipment.
Another 20% houses cooling infrastructure—which alone accounts for 30-40% of electricity consumption. Everything has a backup: dual power feeds, multiple cooling systems, days of diesel storage.
Fiber proximity matters as much as power. Mumbai commands nearly half of India's data center capacity because it has 12 submarine cable landing stations. Latency isn't cosmetic—it's a moat.
The Technical Requirements
The specifications differ dramatically from conventional real estate:
- Floor loading capacity: 2,500 kg per square meter (versus 400-600 kg for offices) to support heavy server equipment
- Floor-to-ceiling height: 18 feet minimum (versus 9-12 for offices) to accommodate raised floors, overhead cable trays, and cooling infrastructure
- Power proximity: Within 1-2 km of 220kV or 400kV substations delivering 50-100 MW continuous power
- Redundancy: Everything has a backup—dual power feeds, multiple cooling systems, backup generators with days of diesel storage
The Land Equation
For developers, all these requirements translate into specific land needs:
- 8-10 acres for every 100 MW of IT capacity.
- Contiguous parcels—operations require unified campus control
- Proximity to substations—ideally within 1-2 km of 220kV or 400kV substations—beyond this, you're building substations yourself
- Flat terrain—slopes add construction costs and complicate cooling
- Low flood risk—basements house critical power equipment
This is why data center developers aren't browsing general commercial land listings. They're scouring industrial corridors, ex-manufacturing sites, and areas near power transmission infrastructure— very different from what traditional developers look at.
The Position Paradox
India operates 271 data centers. The United States runs 4,165. India’s 7% of US data center capacity serves 4 times the population of the US.
What looks like a gap is actually a blueprint—$100 billion in infrastructure that hasn't been built yet. The opportunity isn't theoretical. It's structural, measurable, and exactly what makes the next five years visible to those watching.
The India Advantage: Why Capital is Flowing Here
India builds DCs at $7.50M per MW—21% cheaper than the US, 18% cheaper than China. On a hyperscale 30-50 MW project, that's around $50-120M saved per facility before breaking ground.
Land economics tilt even harder: Indian DC sites run $100-130 per square foot against China's $270. On a 150,000 sq ft hyperscale plot, that's a $20-25M land savings—enough to fund the entire electrical infrastructure.
A 30 MW Mumbai facility costs ~$240M and delivers 9.5% stabilized yields. The same project costs $300M+ in China, $350M+ in the US. To match India's returns, they must charge 25-45% more.
When you can build for 40% less while delivering double-digit yields, capital follows.
Four Forces Driving Demand
1. Hyperscalers Aren't Leasing Anymore
Microsoft is building—not leasing—a 660 MW facility in Telangana. Google built its first self-owned Indian campus in Navi Mumbai. Amazon, Microsoft, Google—all moving from tenant to landlord.
Hyperscalers dominate India's data center demand—24% of stock is hyperscaler-dedicated, with another 66% serving mixed hyperscaler and enterprise clients. They're hunting 500+ MW facilities on 50-100 contiguous acres near fiber landing stations. In H1 2025, Mumbai absorbed 129 MW. Hyperscalers drove nearly all of it.
STT GDC committed $3.2 billion to add 550 MW over five to six years—tripling their current 318 MW capacity across 28 facilities in 10 cities. And then there's Vizag: Google's $15 billion bet on India's first gigawatt-scale facility, complete with its own subsea gateway. When a hyperscaler builds not just the data center but the undersea cables feeding it, the landlord playbook has reached its logical conclusion.
2. Regulation Made Domestic Non-Negotiable
India's 2023 data protection law didn't create new demand—it redirected demand that had been quietly flowing to Singapore and AWS Global for years.
Over night every bank, hospital, insurer and government agency faced a choice: build domestically or carry compliance risk.
Enterprise colocation is witnessing significant growth. BFSI alone represents 20-30% of capacity. Seven states now compete with DC-specific policies: single-window clearances, electricity duty holidays, subsidized land.
3. AI Rewrites the Playbook
Traditional racks draw 6-8 kilowatts. AI clusters? 80-100 kilowatts. You can't retrofit legacy infrastructure for this. The electrical systems, cooling architecture, power delivery—none of it was designed for AI workloads.
India is building AI-ready capacity now while competitors retrofit. New builds engineer for 100-kilowatt racks from day one. When NVIDIA says its GPU deployments in India will grow 10x by year-end, those chips need somewhere to run.
Purpose-built infrastructure captures that demand. Legacy facilities watch from the sidelines.
4. The Digital Baseline That Never Stops
Beneath the hyperscale deals and AI infrastructure runs a quieter force: India's digital baseline that only trends upward.
Indians consume 32 GB per smartphone monthly—highest globally—up from 13 GB five years ago. Internet penetration hit 55%, heading to 76% by 2030. Every percentage point is another 14 million users entering the digital economy.
$2.88 trillion in UPI transactions. Millions streaming simultaneously. Quick-commerce processing millions of daily orders. This isn't emerging market adoption—it's digital-first behavior at population scale.
The digital baseline is relentless, compounding, locked to GDP growth. It's the 15-20% annual growth filling Tier-II cities with edge facilities.
Four Forces, One Direction
Hyperscalers anchor with capital. Regulation forces enterprise domestic. AI rewrites infrastructure specs. Digital consumption creates baseline growth. Together they explain why India needs to add 533 MW annually through 2030—and why that looks conservative.
But demand doesn't land everywhere equally. Data centers cluster where power infrastructure exists, where state policies unlock approvals in months instead of years, and where fiber networks already terminate.
Seven states now compete with DC-specific incentives.
Stay tuned for Part 2 of the blog which maps the state built infrastructure foundations and policies that matter.
