Real Estate Players Shift Focus to Edge Data Centers as Tier 2 Cities Gain Traction

Image Source : Mint

The emergence of edge data centers is reshaping real estate investment strategies, with developers increasingly targeting Tier 2 cities for infrastructure-ready locations. These smaller, localized data processing facilities are becoming essential for businesses seeking lower latency, real-time analysis, and enhanced application performance.

Growing Demand for Edge Data Centers
- Edge data centers are designed to process data closer to end users, reducing delays and improving efficiency for real-time applications
- The market is expanding beyond traditional hyperscale data centers, with investments projected to reach USD 20-25 billion by 2030
- Developers are prioritizing locations with strong connectivity, power availability, and compliance with technical requirements

Tier 2 Cities as Emerging Hubs
- Cities like Faridabad are gaining attention due to their strategic connectivity and infrastructure readiness
- Affordable land and proximity to local users make Tier 2 cities attractive for new developments
- Real estate firms are adapting their strategies to accommodate the technical demands of data center projects

Industry Insights and Market Trends
- India's data center capacity has grown over four times in the last six to seven years, reaching 1,263 MW as of April 2025
- The country has witnessed 859 MW of capacity addition across major data center markets since 2020, with Mumbai leading the expansion
- Chennai and Delhi NCR have also seen significant growth, accounting for 42 percent of new supply since 2020

Future Outlook and Investment Strategies
- Developers are expected to focus on integrating advanced technologies and sustainable practices in data center construction
- The rise of edge data centers will drive further investments in Tier 2 cities, supporting India's digital infrastructure growth
- Industry leaders anticipate continued expansion, with real estate priorities shifting toward technology-driven developments

Sources: WebIndia123, Colliers India, Livemint, ANI News