In a market showdown, data centre operator Digital Realty (NYSE: DLR) and infrastructure asset management company Brookfield Infrastructure L.P. (TSX: BIP.UN; NYSE: BIP) have entered into an agreement to establish a 50/50 joint venture focused on the development, ownership and operation of institutional data centres in India. 

The joint venture will operate under the brand name BAM Digital Realty and comes just five months after Adani Enterprises, the flagship company of the Adani Group, one of India’s largest multi-infrastructure organisations and EdgeConneX, a global data centre operator with 50 facilities in 30 markets around the world, also announced the establishment of a 50:50 joint venture (JV) to develop and operate facilities in the country.

The BAM Digital Realty joint venture is positioned to enable the significant expansion of PlatformDIGITAL, Digital Realty’s global data centre platform which supports the evolving data, control and networking demands of global enterprises. 

The brand intends to acquire land parcels in multiple Indian metros for the development of data centre campuses to support the needs of global hyperscale service providers as well as international and local enterprises. 

Digital Realty and Brookfield said they will design, build and operate sustainable facilities, drawing upon the firms’ broader commitments to sustainable operations, including carbon reduction initiatives.

Digital Realty’s CEO A. William Stein, who oversees a global portfolio of 290 facilities in 47 metros across 24 countries on six continents, said: “India is a rapidly emerging data centre market and offers a bright future, with accelerating adoption of digital business models among a population that recognizes the role of technology for future economic development. 

“Our existing partnership with Brookfield, our Ascenty platform across Latin America, has already delivered long-term value to our customers, with over 250 megawatts of IT load capacity in Brazil, Chile and Mexico either fully built out or currently under construction. We look forward to building upon our successful partnership with Brookfield by entering the Indian data centre market together and extending opportunities for digital transformation with the global consistency of PlatformDIGITAL.” 

On its side, the joint venture will expand Brookfield Infrastructure’s global data infrastructure portfolio, which currently includes $23 billion in assets across data transmission, distribution, and storage, including a portfolio of 139,000 operational telecom wireless towers in India, which it intends to expand to 175,000 over the near term. 

Brookfield has over a decade of experience investing in India, with approximately $20 billion of assets under management including infrastructure, renewable power, real estate, and private equity.

Arpit Agrawal, Managing Director and Head of India & Middle East, Brookfield Infrastructure, said: “Through the development of a high-quality, multi-city, India-focused data centre platform, we believe BAM Digital Realty is well-positioned to play a meaningful role in addressing the large and growing data demand in the country and to offer a differentiated solution to customers.”

India’s data centre play

With a population of over 1.4 billion and only 52.5% internet users, the world’s fifth-largest economy in terms of GDP and an expanding focus on the digital delivery of services, India represents a key market opportunity to extend coverage, capacity and connectivity options for the world’s leading service providers as well as local and global enterprise customers. 

India is a high-growth market, with data centre demand expected to significantly increase, driven by rapidly growing data consumption, digitisation of the economy, the onset of 5G and data localisation trends. 

Think tank 451 Research, part of S&P Global Market Intelligence, estimated the India data centre market to be made of 453.9 MW of power as of the end of 2020. This represents a  distribution of just 1 MW of power per million internet users, far from the 8 MW in the US and 21 MW in Europe, according to Anarock Capital Research & Industry Estimates.

However, just as BAM Digital Realty and other market investments from Equinix (NASDAQ: EQIX), CapitaLand (SGX: C31), EdgeConneX/Adani Group, Colt Data Centre Services, CtrlS, RackBank, NTT GDS, Web Werks and others are expected to contribute to a boom in development, Arizton Advisory & Intelligence projects a 237% increase in IT load power by 2025, when the market is expected to reach 1,076 MW, with other research houses pointing to more than 2,000 MW of capacity by mid-decade.

In terms of square footage, India is forecasted to add between 9.3 million and 11 million sq ft of hosting floor also by 2025. The Indian data centre market is expected to grow at a CAGR of over 12% during the period 2020−2026, when it is expected to cross $8 billion worth of investments.

However, these figures were estimated before the large deals respecting to BAM Digital Realty and AdaniConneX, both set to dramatically change the data centre monopoly across several Indian states.

In the first six months of 2021 alone, more than $4 billion have been committed into India be it for land acquisitions, operations buyouts, or greenfield investments.

Below is a table with some of the major deals of 2021 so far:

Company	Transaction Model	Investment	Location
ST Telemedia GDC	Greenfield Investment	$136m	Noida
NTT	Greenfield Investment		Noida
Hiranandani Group	New build x 6	$1.1bn	Uttapara, Kolkata
Reliance Jio	New build	$950m	Uttar Pradesh
Adani / EdgeConnex (AdaniConneX)	JV	Undisclosed	Chennai, Navi Mumbai, Noida, Vizag, Hyderabad
Webwerks India / Iron Mountain	JV	$150m	Mumbai, Pune, Delhi NCR
DC Operator (undisclosed)	Sub lease of land	Undisclosed	Mumbai
Princeton Digital Group	New build	Undisclosed	Navi Mumbai
NTT	Investment	$1.5bn	Undisclosed – Expected to be spread across India
Webwerks	New build		Navi Mumbai
NTT	Land acquisition	$106m	Mumbai
Ascendas Property Fund Trustee Pte. Ltd	DC Build	$161m	Mumbai
Digital Realty/Brookfield	JV	Undisclosed	Undisclosed – Expected to be spread across India

Investments of the magnitude shown above and even larger are set to continue to make headlines in India for the foreseeable future.

Other digital infrastructure CAPEX that is being accelerated – especially as the smart city rollouts continue to accelerate across India – include subsea cables, internet exchanges and an incoming wave of energy-related investments to power real estate assets.

Anuj Puri, chairman of ANAROCK Property Consultants Private Limited, said in the company’s latest report: “India is on the verge of a new age of digital explosion. As one of the most populated countries in the world, rising mobile penetration is leading to significant data proliferation amongst its consumers. India offers a large base of global users for digital mediums such as social media apps, IOT devices and OTT platforms.

“With the expected 5G implementation and data localisation norms, need for data storage to be closer to its users gains greater importance, with a view to measure down on latencies. The total third-party data centres industry is expected to move from the current 590+ MW to ~2,000 MW in the next 2-3 years. With an additional capital waiting in the wings, to support the development of ~520 MW of data centres, one should expect significant capacity addition in India soon.”

He added that data centres could end up bringing in significant foreign investments into India in the next few years, also leading to an entirely new framework of policies for privacy of data, data warehousing as well as exports.

Read more on India’s latest data centre investment stories:

• ST Telemedia breaks ground on $152m greenfield India data centre
• EdgeConneX, Adani partner for India’s largest data centre build out set to last a decade
• NTT, Tokyo Century partner for India data centre push
• CapitaLand’s data centre investments top $1.2bn with new Mumbai site
• Acronis launches India data centre, invests $80m into Israel