Kochi has huge potential for data centre business: JLL

KOCHI: Kochi has a huge potential, perhaps the third city in the country after Mumbai and Chennai, for growing data centre business, says Rahul Arora, Managing Director-Bangalore of the global real estate consultancy Jones Lang LaSalle (JLL). What gives the town the unique position is that the submarine communications cable system SEA-ME-WE has a landing here.
“In India, Mumbai is the number one because they have a number of cables landing there and that becomes an obvious choice and the quality of power there is very good because the availability of power is a major factor.They have committed to a couple of large data centres already. Second is Chennai, where we have seen some traction already happening and in my mind the third place is Kerala, if you can, with the help of government, could develop a policy around it, I am sure it can become a big opportunity for Kerala,” Arora said.
Data centre is a new entry to the office segment [of the real estate sector] and has been doing extremely well, Arora said. “During the lockdown, we had noticed a transaction that had happened in Chennai and we are talking to a number of players, who are very interested in evaluating India from that perspective. Kerala obviously stands out because of the digital cable landing there. That is a big opportunity for Kerala and other states with direct access [to the SEA-ME-WE cable]. In Mumbai, Chennai and Kochi already the traction is happening, obviously, it will take time for these occupiers to evaluate and figure out to where to set up facility”.
According to Arora, data centres need huge investments, but they, in turn, will attract other industries. “These are very huge investments – each data centre needs Rs 800 – 1000 crore investments minimum, other than the real estate part, only for infrastructure. The kind of jobs creation and the kind of other elite industries they attract will really give a boost to the overall workplace around that area,” he said.
While talking about the overall real estate sector in Kerala, Arora said that the market is in a healthy state. “You have 26% of vacancy, which is very healthy for any market – when it goes below 10% it becomes a landlord market and when it goes above 30%, it is considered as tenant-favourable. Hence this percentage is healthy because your existing clients will take up this space,” he said.
Regarding the office segment, Kochi and Thiruvananthapuram has done fairly well in the past, Arora noted. “Regarding Kochi, the absorption is between 700,000 – 1 million sq ft and on the other hand, in Thiruvananthapuram, as it is largely controlled by the government there is only limited space, but as soon as it comes in, most of the existing occupiers take up that. From office market perspective, both the markets are very good,” he said.