Data centre boom to drive housing demand, create over 4.33 lakh ecosystem jobs by 2030, finds report

Rapidly expanding data centre ecosystem in India will significantly drive demand for residential real estate and reshape urban corridors over the coming years, research by proptech company Square Yards found.

The proposed data centre expansion of 9,030 MW could potentially generate some 4.33 lakh ecosystem jobs and create demand for an estimated 195 million square foot (sqft) of housing by 2030, as per the report.

Vivek Agarwal, Co-Founder and Chief Technology Officer, Square Yards, in the release noted that India's real estate growth has for decades, been shaped by highways, industrial corridors, airports and IT parks; and data centers now represent the next evolution of that story.

The Doughnut Effect: Potential impact

The report dubbed the long-term impact of data centres on ecosystem as “The Doughnut Effect”, adding that long-term impact could extend well beyond technology and act as catalysts for housing demand, infrastructure investment and urban expansion across emerging growth corridors.

According to the report, the strongest residential impact is unlikely to emerge within the data centre campuses themselves. It instead identified a 5-15 km 'Golden Ring' surrounding major facilities where infrastructure upgrades, mixed-use developments, residential townships, retail centers and civic amenities are expected to flourish.

As these supporting ecosystems mature, they create sustained housing demand driven by ancillary employment and economic activity rather than direct workforce concentration, the report added. Check illustration below for expected affects:

Substantial headroom for infrastructure expansion

The report further noted that while India currently generates nearly 20% of the world's digital data, it accounts for only 4% of global data centre capacity — which means there is “substantial headroom for infrastructure expansion”.

With artificial intelligence (AI), cloud computing, and enterprise digitisation accelerating investments, India's installed data centre capacity is expected to grow significantly over the coming years, bringing with it a new wave of infrastructure-led real estate development, it added.

Among the major beneficiaries expected to witness increasing residential activity as digital infrastructure investments accelerate alongside improvements in transport, utilities and commercial ecosystems, include:

• Maharashtra is projected to generate over 54 million sqft of residential demand,
• Followed by Karnataka with nearly 28 million sqft,
• Andhra Pradesh with over 23 million sqft,
• Uttar Pradesh with approximately 22.7 million sqft,
• Telangana with 21.6 million sqft and
• Tamil Nadu with 19.4 million sqft.

Potential to generate 4.33 lakh ecosystem jobs

The data centre expansion is also expected to generate close to 4.33 lakh ecosystem jobs across the major metros.

“While these facilities (data centres) themselves employ relatively few people, they attract the critical infrastructure that enables long-term urban development. Investments in power, fiber connectivity and logistics create confidence for businesses, developers and institutions, eventually driving residential and commercial growth around these emerging digital corridors. We believe data centers will increasingly serve as infrastructure anchors that redefine how cities expand in the coming years,” Agarwal added.

Check illustration below for city-wise likely impact:

According to Sunita Mishra, Vice President – Research & Insights at Square Yards, data centres in India are expected to not only drive but shape the future of residential developments across the country. “This growth will not be restricted to mega cities only. We expect Tier-2 and Tier-3 cities to benefit from this grand opportunity equally,” Mishra added.

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