Rising Demand for Data Centres: A Sustainable Future?

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October 3, 2024

Rising Demand for Data Centres: A Sustainable Future?

India’s data centre industry is witnessing unprecedented growth, with demand nearly doubling in the first half of 2024, reaching approximately 200 megawatts (MW). A recent analysis highlights a robust expansion in IT infrastructure across pivotal micromarkets, reflecting a significant shift in how businesses utilise data services.

The surge is marked by an addition of around 71 MW of IT capacity, bringing the total operational stock to 942 MW—a striking 21% increase compared to the 778 MW logged in the same period last year. This leap in capacity is predominantly driven by hyperscalers, as well as the Banking, Financial Services, and Insurance (BFSI) sectors, IT and ITeS industries, and various service sectors that increasingly rely on data centre operators for colocation and ancillary services. Mumbai continues to dominate the landscape, commanding a remarkable 54.9% of the total capacity. Following Mumbai, Chennai accounts for 12.3%, Bengaluru 8.2%, and Pune 7.2%. Notably, hyperscalers contribute 22% of the total capacity, with enterprises making up 10%, while the remaining 68% is shared between these segments, illustrating a diverse usage pattern within the industry. The rising inclination towards colocation services can be attributed to escalating capital and operational expenditures, uncertainties surrounding future demand, and the necessity for scalability. The high costs associated with advanced security systems and high-performance GPUs, coupled with soaring real estate prices, are prompting businesses to lean more towards enterprise colocation solutions.

Looking ahead, projections from industry analysts suggest a robust demand trajectory, estimating a requirement of 400 MW by the end of 2024, against an anticipated supply of 350 MW. Operators are diversifying their offerings beyond conventional colocation, incorporating networking, cloud solutions, specialised hardware like GPUs, and other managed services. This growth is largely propelled by surging internet usage, the rollout of 5G technology, and the pressing need for ultra-low latency—factors that are further exacerbated by the rising adoption of AI and IoT technologies. From a sustainability perspective, this boom in data centre demand is not without its challenges. The substantial energy consumption required to support these facilities raises questions about carbon footprints and the ecological impact of expansion. Industry stakeholders are increasingly recognising the importance of incorporating green technologies and renewable energy sources to mitigate environmental impacts. Sustainable practices, such as energy-efficient cooling systems and solar-powered operations, are becoming essential as the sector strives to balance growth with environmental responsibility. This evolving landscape not only reflects technological advancements but also emphasises a collective responsibility towards creating a sustainable future, marking a transformative phase in India’s digital economy.

Mahindra Sells 20.5 Acres in Kandivali

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October 1, 2024

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The dynamism of Mumbai’s real estate market, Mahindra and Mahindra Ltd has sold a substantial 20.5-acre plot in the Kandivali area for ₹210 crore. This deal, finalised with Blueprintify Properties Pvt Ltd—an affiliate of the Pune-based Rucha Group—marks one of the most noteworthy land sales in the city’s western suburbs this year. According to property registration records from CRE Matrix, the deal was officially documented on July 24, 2024.

This non-agricultural land, strategically situated with direct access to the Western Express Highway (WEH) and bordering the Sanjay Gandhi National Park (SGNP), significantly enhances its appeal. Local property brokers report that the Kandivali East micro-market commands a residential price range of ₹25,000 to ₹35,000 per square foot, reflecting the area’s burgeoning market value. The transaction incurred a stamp duty of ₹13.41 crore, highlighting the substantial financial implications of the deal. This sale is indicative of Mahindra and Mahindra’s broader strategy to optimise its asset portfolio, reallocating high-value land assets to support its various ventures. Interestingly, this sale follows a similar transaction in February 2022, when Mahindra Lifespaces—part of the Mahindra Group—acquired approximately 9.24 acres of land in the same locality for ₹365 crore. That acquisition aimed at real estate development marked Mahindra Lifespaces’ second residential initiative in Kandivali, following the successful launch of the ‘Mahindra Roots’ project. The new development is anticipated to provide around 1 million square feet of carpet area, further underscoring the area’s growth potential.

This recent transaction highlights the sustained demand for prime real estate within Mumbai’s suburban regions. The connectivity of the land and its proximity to vital landmarks make it an attractive investment opportunity for developers. Blueprintify Properties Pvt Ltd’s acquisition signals its ambition to extend its real estate presence in Mumbai, a city continually reshaping its skyline. It is worth noting that land transactions across India have shown a slowdown during the April to June quarter, with only 25 deals covering 325 acres, according to ANAROCK, a prominent real estate consultancy. This figure represents a decline from the 29 deals covering 721 acres during the same period the previous year. High land prices and the upcoming general elections have been cited as primary factors contributing to this downturn. Despite these broader market challenges, the recent Kandivali deal illustrates the resilience and ongoing potential of Mumbai’s real estate sector. As the city remains a magnet for significant investments, such transactions are poised to play a crucial role in shaping its future landscape, fostering further growth and development.

Balancing Ecology and Community in Western Ghats

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October 1, 2024

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Balancing Ecology and Community in Western Ghats

The landslides in Wayanad have reignited urgent discussions surrounding the long-delayed finalisation of the Ecologically Sensitive Area (ESA) framework for the Western Ghats. Since 2011, attempts to reach a consensus among the six affected states have been ongoing, yet progress has been slow. The Centre’s third committee, tasked with resolving this intricate issue, is reportedly in the final stages of deliberation and is anticipated to produce a comprehensive framework by next month.

The five-member committee, led by former Director General of Forests Sanjay Kumar, is focusing on three key principles to guide its recommendations. First, the ESA framework must be acceptable to all involved states and stakeholders. Second, it is imperative to minimise habitat fragmentation. Third, the framework should be inherently connected to vital ecosystem services—spanning from coastal fisheries to microclimate and water conservation, alongside robust biodiversity protection. This committee aims to adopt a different approach compared to previous recommendations from the Gadgil and Kasturirangan committees, which faced substantial pushback from stakeholder states. The new framework will not only emphasise biodiversity conservation but also strive to create a constructive and predictive mechanism, utilising a more supportive language to foster trust among local communities.

Moreover, any requests for exclusions from the ESA will be subjected to thorough examination, ensuring that justifiable grounds are presented. The ultimate determination will consider whether to maintain the proposed 59,000 square kilometres suggested in the 2022 draft notification or to make adjustments. Achieving consensus among the states remains the principal challenge. Since the Gadgil committee’s original recommendation to declare 129,037 square kilometres as ecologically sensitive, a lack of agreement has persisted. A parliamentary committee report from December 2022 underscored the environment ministry’s relentless efforts to harmonise views among state governments, public representatives, and local communities, despite ongoing apprehensions.

An expert involved in these discussions, who preferred to remain anonymous, expressed discontent regarding the slow pace of progress. “At the ground level, public resistance is significant, primarily due to a lack of awareness and the absence of alternative employment opportunities. Political will is also lacking at both central and state levels, creating a ‘chalta hai’ attitude. If there were more proactive measures taken to sensitise communities and identify solutions, we would have made more headway,” the expert remarked. As the committee works towards finalising the framework, it is crucial to maintain a balanced approach that reconciles environmental conservation with the practical needs of the affected communities. By integrating local perspectives and ecological priorities, the ESA framework can become a model for sustainable development in the region.

Ratanarak Secures 71.88% in Siam City Cement Takeover

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October 1, 2024

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Ratanarak Secures 71.88% in Siam City Cement Takeover

The Ratanarak Group has bolstered its dominance in Siam City Cement by acquiring Jardine Cycle & Carriage’s 25.54% stake in the company. The transaction, valued at THB 12.18 billion (USD 353.97 million), raises the Ratanarak Group’s shareholding to a commanding 71.88%. This acquisition further strengthens the Group’s control over Siam City Cement, a leading player in the country’s industrial sector.

The deal, announced earlier this week, triggered a significant 9.4% surge in Siam City Cement’s stock price, propelling it to THB 156 per share—the highest level since February 2023. The Ratanarak Group’s subsidiary, Sunrise Equity, purchased 76.1 million shares at THB 160 per share, reflecting an 11.5% premium over the stock’s closing price before the deal. This premium highlights the strategic value of the transaction, as it pushes Siam City Cement’s overall valuation to THB 47.68 billion. Analysts at Jefferies, while noting the market’s positive reaction, described the acquisition price as modest in comparison to historical transaction valuations in the cement industry. However, they predict strong earnings growth for Siam City Cement, citing stabilised coal prices and the company’s ongoing cost-cutting initiatives as key factors for its financial trajectory.

Jardine Cycle & Carriage, which had held a stake in Siam City since 2015, experienced a 1.7% rise in its own shares following the sale, reaching their highest price since June this year. The sale aligns with Jardine’s broader strategy of reallocating capital to support long-term growth and sustainability, with proceeds directed towards its internal funding needs. This acquisition marks a pivotal moment for the Ratanarak Group, which has a long-standing relationship with Siam City Cement. Founded by the late Chuan Ratanarak, the Group maintains significant holdings in major Thai companies such as Allianz Ayudhya Capital and Eastern Star Real Estate.

The move further solidifies Ratanarak’s foothold in Thailand’s industrial sector, reflecting the Group’s ongoing commitment to consolidating its influence across key industries in the Thai economy. As the Thai construction and infrastructure sectors continue to grow, the Ratanarak Group’s increased control over Siam City Cement could yield long-term benefits. The acquisition underscores the Group’s commitment to maintaining its leadership role in the country’s industrial development, reaffirming its legacy of strategic foresight and business acumen.

Luxury Home Sales Soar in NCR 2024

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October 1, 2024

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The National Capital Region (NCR) is experiencing a remarkable transformation in its real estate landscape, evolving from a centre of questionable property dealings to a vibrant and dynamic market. Recent data reveals a significant shift in housing demand towards the luxury segment. According to research by ANAROCK, over 45% of approximately 32,200 housing units sold in the first half of 2024 were luxury homes. This marks a substantial turnaround from 2019, when luxury homes constituted a mere 3% of sales, while affordable housing dominated at 49%.

In absolute numbers, around 14,630 luxury units were sold in the NCR during H1 2024, a staggering rise from just 1,580 units in all of 2019. Conversely, the affordable housing segment has faced a dramatic decline, with approximately 7,730 units sold in the same period, down from 23,180 units in 2019. Gurugram has emerged as the frontrunner in the NCR’s real estate market, witnessing robust activity. ANAROCK officials reported that Millennium City sold around 17,570 units across various price points in H1 2024, with luxury homes making up 59% (about 10,365 units) and affordable homes accounting for 27% (around 4,710 units). This is a stark contrast to 2019, when Gurugram sold approximately 13,245 units, with 43% (about 5,740 units) in the affordable segment and only 4% (around 470 units) in the luxury category.

Noida and Greater Noida collectively recorded the sale of approximately 8,425 units in H1 2024, with 42% (approximately 3,550 units) classified as luxury homes. In contrast, the affordable segment represented a mere 13% (about 1,100 units). The mid and premium segments, priced between INR 40 lakh and INR 1.5 crore, captured the highest sales share at 45% (approximately 3,770 units). The market shift has prompted developers to recalibrate their strategies. In H1 2024, of the 24,300 units launched across various segments in the NCR, only 2,570 units (11%) were affordable, while a substantial 18,600 units (77%) targeted the luxury market. This is a sharp departure from 2019, when over 47% (around 16,680 units) of the 35,280 units launched were affordable, with a mere 12% (around 4,230 units) aimed at luxury buyers.

This transformation reflects changing consumer preferences and a burgeoning economic landscape. As the luxury housing market flourishes, the affordable segment faces significant challenges, potentially impacting overall housing affordability in the NCR. This shift raises concerns about social equity and the ability of various income groups to access quality housing, underscoring the need for a balanced approach in real estate development. Sustainability also plays a critical role in this evolving market. As luxury homes proliferate, it is essential for developers to incorporate sustainable practices, such as energy-efficient designs and eco-friendly materials. This not only aligns with global sustainability goals but also enhances the market appeal of these properties, offering long-term benefits for both developers and homeowners alike.

Robotics Revolution Drives Office Demand in Bengaluru

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October 1, 2024

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Robotics Revolution Drives Office Demand in Bengaluru

Bengaluru is witnessing a remarkable surge in office space absorption, propelled primarily by the artificial intelligence (AI) and robotics sectors. According to the latest quarterly report by Vestian, titled The Connect Q2 2024, these sectors accounted for a significant 21% of total office space absorbed in the city during the second quarter of 2024. This trend reflects the rapid global advancements in AI technology and the robust local ecosystem that supports innovation.

Overall, the IT-ITeS sector, which encompasses AI and robotics, dominated the landscape, representing 69% of Bengaluru’s total office space absorption in the same period. The city has emerged as a frontrunner in India’s office space market, contributing to 25% of the national absorption share in Q2 2024, with Hyderabad and Mumbai following closely at 20% each. Notably, Pune experienced an astonishing quarterly growth of 307%, while Chennai faced a stark 48% decline, highlighting the varied dynamics across different regions. The National Capital Region (NCR) also reported a significant quarterly decrease of 37%. Except for Chennai and NCR, all major cities experienced increases in office space absorption compared to both the previous quarter and the same period last year. In Q2 2024, the IT-ITeS sector not only led the absorption figures with a 38% share but was also followed by the BFSI (Banking, Financial Services, and Insurance) sector at 12% and Consulting Services at 10%. The demand for flexible workspaces was also notable, accounting for 8% of total absorption.

The first half of 2024 recorded over 30 million square feet of office space absorbed, reflecting an 18% increase from the same period in 2023. With such strong demand for grade-A office spaces across India’s top seven cities, the total absorption for 2024 is anticipated to exceed 60 million square feet, maintaining the momentum established in 2023. In Q2 2024 alone, office space absorption reached 17.04 million square feet—a remarkable 27% increase from the previous quarter and a 23% rise compared to the same quarter last year. This growth is attributed to an improved global macroeconomic environment and India’s resilient economic performance amid global challenges. New office space completions also rose, increasing by 17% in the first half of 2024 compared to the same period last year, totalling 23.2 million square feet. Q2 2024 alone saw a 15% quarterly increase and a 10% yearly rise in new completions.

While Bengaluru and Pune experienced declines in construction activities, cities like Mumbai reported significant growth, with 3.3 million square feet of new completions in Q2 2024—a staggering 230% quarterly rise. Bengaluru led the charge in new completions with a 28% share, closely trailed by Mumbai at 27%. The southern cities, including Bengaluru, Chennai, and Hyderabad, accounted for 57% of total new completions in Q2 2024, albeit down from 63% in the previous quarter. As the city continues to evolve, the intersection of technology and real estate is set to redefine Bengaluru’s skyline, creating spaces that not only serve businesses but also foster innovation and sustainability, embodying the spirit of a thriving metropolis.

Global Firms Boost India’s Office Space Surge

Commercial

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October 1, 2024

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Global Firms Boost India’s Office Space Surge

India’s commercial real estate sector is witnessing an unprecedented rise in office space demand, driven primarily by the rapid expansion of Global Capability Centres (GCCs) by multinational corporations. According to a report by CBRE and Zyoin, the sector has seen an upsurge since 2022, with global companies leasing approximately 53 million square feet of office space in major urban hubs such as Bengaluru, Hyderabad, Chennai, Pune, Delhi-NCR, and Mumbai. This surge in leasing activity underscores India’s growing importance as a global business hub and a strategic location for establishing and expanding GCCs.

Delhi-NCR has emerged as one of the most sought-after markets, particularly due to developments along the Noida Expressway. The region’s well-developed infrastructure, combined with its strategic location, has made it an attractive destination for international corporations seeking to enhance operational efficiencies. Noida’s accessibility, robust connectivity, and modern commercial spaces have driven its rise as a key player in the country’s real estate boom. The growing presence of GCCs in this area reflects the increasing reliance of multinational companies on India for business process outsourcing, technology-driven solutions, and critical operational support.

From a sustainability perspective, the expansion of GCCs into premium office spaces in India can be seen as a double-edged sword. On one hand, the growth of these centres contributes to job creation, technological innovation, and broader economic development. On the other hand, it raises concerns about environmental impact and the need for sustainable urban planning. With India’s commercial real estate sector growing rapidly, there is an increasing emphasis on adopting green building practices and energy-efficient designs to minimise the carbon footprint of new developments.

This boom in office space demand also highlights important civic issues related to urban development. The expansion of GCCs brings with it challenges such as increased traffic, strain on existing infrastructure, and the need for adequate housing to support the growing workforce. As India continues to attract global businesses, stakeholders must ensure that future development projects are aligned with sustainable growth practices, balancing economic expansion with environmental responsibility and civic well-being.

Shapoorji Pallonji Restructures Real Estate Business

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October 1, 2024

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Shapoorji Pallonji Restructures Real Estate Business

The Shapoorji Pallonji Group has unveiled a strategic overhaul of its real estate operations with the formation of Shapoorji Pallonji Real Estate (SPRE). This new holding company aims to consolidate the group’s extensive real estate assets, spanning key Indian cities, into a unified entity designed to streamline operations and unlock significant value. SRE will oversee a vast portfolio comprising 45 land parcels and ongoing projects with a total development potential of approximately 140 million square feet.

With projects already underway covering 22 million square feet, the holding company is poised to capitalize on a portfolio valued at around $6 billion. The newly appointed Managing Director and CEO of SPRE emphasized that this consolidation aligns with the group’s strategic vision to enhance operational efficiency and value creation. The holding company will offer easier access to capital, enabling it to execute large-scale projects more effectively and provide transparency and confidence to investors. SPRE plans to raise approximately $800-900 million through an initial public offering (IPO) of a 10-12% stake, with further public floatation potentially increasing total fundraising to around $2 billion.

The proceeds from the IPO will be utilized to fuel the company’s growth and expansion plans. SPRE’s real estate assets are concentrated in major urban centers including Mumbai, Pune, Bengaluru, Gurugram, and Kolkata, with additional holdings in Mysore and Nagpur. The company also manages about ₹6,500 crore in debt, primarily from construction finance and asset-backed loans. As part of its restructuring, SPRE intends to significantly deleverage its balance sheet by prepaying ₹2,500-3,000 crore of debt within the year. This will improve the company’s financial position and enhance its ability to attract investors. The creation of SPRE reflects the Shapoorji Pallonji Group’s commitment to positioning itself for sustained growth in the real estate sector. By leveraging its substantial land bank and strategic financial planning, the company aims to drive future success and solidify its position as a leading player in the Indian real estate market.

Omaxe Faces Regulatory Heat Over Financial Irregularities

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October 1, 2024

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Omaxe Faces Regulatory Heat Over Financial Irregularities

The Securities and Exchange Board of India (SEBI) has imposed a two-year ban on Omaxe Limited, a prominent player in the real estate sector, along with its chairman, Rohtas Goel, managing director Mohit Goel, and three other senior executives. This decisive action follows an extensive investigation that uncovered serious irregularities in the company’s financial statements.

The banned individuals include Sudhangshu S. Biswal, Arun Kumar Pandey, and Vimal Gupta, all of whom will be prohibited from holding directorial or managerial roles in any listed company during the ban period. Additionally, SEBI has levied fines totalling ₹47 lakh on 16 associated entities, with penalties ranging from ₹1 lakh to ₹7 lakh, which must be paid within 45 days. The regulator’s 126-page order reveals that these entities executed a fraudulent scheme, misrepresenting normal transactions as lending activities to artificially maintain Omaxe’s share price amidst declining financial performance. Financial statements for the fiscal years 2018-19, 2019-20, and 2020-21 were manipulated, distorting revenue figures, debtors, advances, and expenses. This deceptive practice was aimed at sustaining the collateral value held by promoters against loans, thereby misleading shareholders and investors about the company’s financial stability.

SEBI’s investigation highlighted that these manipulated statements had a direct influence on Omaxe’s stock price, misleading investors into retaining or trading shares under false pretences. The forensic audit, which spanned the period from April 1, 2018, to March 31, 2021, uncovered extensive misrepresentation and fraud that went undisclosed to the shareholders. This regulatory action underscores SEBI’s unwavering commitment to uphold market integrity and safeguard investor interests. By barring the implicated parties from the securities market and prohibiting their involvement in any dealings, SEBI aims to prevent further market distortions while reinforcing the principles of transparency and accountability. The ban on Omaxe and its key executives serves as a stern reminder of the importance of ethical financial practices in corporate governance. SEBI’s vigilant oversight is expected to instil greater adherence to compliance among listed companies, thereby enhancing the standards of corporate governance within the Indian securities market. As the regulatory landscape continues to evolve, this action against Omaxe highlights the pressing need for integrity and accountability in corporate financial reporting.

MHADA Land Scam: ₹200 Crore Fraud Exposed

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October 1, 2024

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MHADA Land Scam: ₹200 Crore Fraud Exposed

Authorities in Thane have filed charges against thirteen individuals implicated in a massive ₹200 crore scam involving the redevelopment of buildings on Maharashtra Housing and Area Development Authority (MHADA) leased land. The case, uncovered by the Chitalsar police, centres around financial irregularities in a redevelopment contract awarded to a private firm responsible for modernising 18 buildings. The firm allegedly secured a loan of ₹200 crore by mortgaging MHADA land using a fraudulent mortgage deed, diverting funds intended for redevelopment.

The fraudulent activity includes obtaining a loan based on misrepresentations and the misuse of an unauthorised No Objection Certificate (NOC) provided by a housing society chairperson. The NOC was reportedly issued without proper consent from either the residents or MHADA, bypassing essential regulatory checks. This has raised alarms about oversight gaps and the extent of financial mismanagement in government-backed redevelopment projects. As of now, no arrests have been made, but the Thane police have initiated a full-scale investigation into the case to trace the flow of funds and establish accountability.

From a sustainability angle, this scam threatens the integrity of affordable housing initiatives in urban regions, particularly in cities like Thane, where redevelopment plays a critical role in addressing housing shortages. MHADA’s redevelopment projects are designed to provide much-needed residential units, but financial malpractices of this scale could hinder such efforts. The diversion of funds meant for redevelopment stalls progress and delays access to safe housing for thousands of residents.

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