Real Estate Players Focus on Edge Data Centers in Tier 2 Cities
The shift towards edge data centers is reshaping the real estate landscape in India, with a growing focus on Tier 2 cities like Faridabad. These cities are gaining traction due to their strategic connectivity and infrastructure readiness.
Edge Data CentersTier 2 CitiesReal Estate InvestmentData Center CapacityDigital InfrastructureReal EstateJun 02, 2025
Executives of real estate firms say that emerging hubs like Faridabad among many tier 2 cities are gaining attention for their strategic connectivity and infrastructure readiness. At the same time, Tier 2 cities with abundant and affordable land are being eyed for new developments, particularly for edge data centers where proximity to local users is critical.
"The growing investment in data centers—projected at USD 20-25 billion by 2030—is a clear sign of how digital infrastructure is becoming more central to India's growth story. This shift is gradually reshaping real estate priorities as well," Uddhav Poddar, CMD of Bhumika Group, said. "Emerging hubs like Faridabad are gaining attention for their strategic connectivity and infrastructure readiness," he added.
He further elaborates that developers must now focus on "power availability, connectivity, and compliance with technical requirements that go beyond traditional commercial or industrial spaces." This means that real estate development for data centers requires a unique blend of technical expertise and strategic location planning.
According to a report by real estate and investment firm Colliers, while hyperscale data centers have dominated the narrative so far, the evolution of edge data centers is on the rise. A hyperscale data center is a very large facility designed to handle massive amounts of data, compute, and storage needs, typically used by large internet companies and cloud service providers.
"Interestingly, the market is expanding beyond large-scale colocation facilities and hyperscalers to edge data centers driven by increasing need for lower latency, real-time analysis, enhanced app performance, and business agility," said Jatin Shah, Chief Operating Officer, Colliers India.
India's DC capacity has grown over 4X times in the last 6-7 years and stands at 1,263 MW as of April 2025 and is expected to cross 4,500 MW by 2030 with USD 20-25 billion, the Colliers report added. On the supply front, India has witnessed 859 MW of capacity addition across the top seven primary DC markets since the beginning of 2020. In terms of geographical spread, 44 per cent of the new supply since 2020 was concentrated in Mumbai. This was followed by Chennai and Delhi NCR, which together accounted for 42 per cent of the capacity addition since 2020.
Frequently Asked Questions
What are Edge Data Centers?
Edge Data Centers are small, localized data processing facilities situated close to devices and end users. They help in enhancing performance and efficiency for real-time applications by reducing latency and providing faster data processing.
Why are Tier 2 cities gaining attention for data center development?
Tier 2 cities are gaining attention due to their strategic connectivity, infrastructure readiness, and abundant, affordable land. These factors make them ideal for developing edge data centers, which require proximity to local users for optimal performance.
What is the projected investment in data centers by 2030?
The projected investment in data centers by 2030 is USD 20-25 billion. This investment is driven by the growing need for digital infrastructure to support real-time applications and business agility.
What are the key requirements for developing data centers in real estate?
Developers must focus on power availability, connectivity, and compliance with technical requirements that go beyond traditional commercial or industrial spaces. This includes ensuring robust infrastructure and technical expertise.
How has India's data center capacity grown in recent years?
India's data center capacity has grown over 4X times in the last 6-7 years, standing at 1,263 MW as of April 2025. It is expected to cross 4,500 MW by 2030, driven by significant capacity additions in key markets like Mumbai, Chennai, and Delhi NCR.
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