Data centre boom: Realty cos eye revenue upside, portfolio diversification

Data centres are increasingly becoming a key part of the real estate landscape, as reality firms — with rich expertise in land acquisition, construction and dealing with government approvals — are seeing them as opportunities to build long-term assets with continuous revenue flow.

 

Anant Raj, Lodha, L&T Realty, DLF, Panchshil Realty, Rustomjee, Hiranandani Group, Mindspace Reit and many more realty firms are seeing data centres as “future-proof assets” with long-term returns.

 

While some have been in the segment that is promising nearly 20 per cent returns on investment, more players are getting into this space as they diversify their portfolios amid a sharp upside in demand for data centres, stemming largely from global capacity centres and industry’s quickened AI adoption. 

 

“While our core strength lies in real estate development, we see data centres not only as a complementary extension of our capabilities but also as a transformative business opportunity aligned with the country’s accelerating digital evolution,” said Amit Sarin, managing director, Anant Raj.

 

Sarin’s firm is targeting the development of 307 Mw of capacity across its three campuses, with an investment commitment of over ₹10,000 crore over the next four-five years. 

 

The industry experts believe that the developers are leveraging their expertise in land acquisition, construction, dealing with government approvals, and maintaining tenant relationships.

 

“Real estate developers with experience in developing commercial buildings see a natural synergy for skills such as land acquisition, obtaining government permits, construction and development, and sourcing infrastructure such as fibre and power (including green power). Further, with their vast tenant relationships, they are able to tap into these networks to address such companies’ data centres needs through diversification,” said Devi Shankar, executive director, industrial, logistics & data centres, Anarock Capital.

 

According to Colliers India, India’s data centres capacity as of April 2025 is about 1,263 Mw with 15.9 million square feet (msf) of real estate engaged. 

 

India’s data centre capacity is set to cross 4,500 Mw by 2030, as $20-25 billion of future investments are likely to materialise, with a real estate footprint of 55 msf.

 

“With the rise of AI and cloud adoption, especially by global tech firms, data centres are becoming a key part of the real estate landscape,” said Ramesh Nair, CEO and MD, Mindspace Reit— the only Indian Reit with a data centre portfolio.

 

“The post-Covid shift to hybrid work, alongside the boom in edtech, e-commerce, and digital banking, has fuelled a surge in data consumption and storage needs. In response, major domestic and international players are investing heavily in building both hyper-scale and edge data centres across the country,” Shabala Shinde, partner and real estate industry leader, Grant Thornton Bharat, said.

 

The developers view DCs as assets that can give stable and long-term returns amid increasing usage of data, better 5G penetration, and data storage requirements.

 

Mumbai-based developer Niranjan Hiranandani, managing director, Hiranandani Group, said, “The rationale behind this move is multifaceted: we view data centres as future-proof assets offering stable, long-term returns, supported by the exponential rise in data consumption, accelerated adoption of cloud services, and deepening digital penetration.”

 

Hiranandani noted that while it is a capex-heavy business, the returns are both feasible and favourable. 

 

“Data centres typically offer an ROI ranging from 15-20 per cent, which is compelling compared to traditional real estate segments.”

 

Meanwhile, Boman Irani, CMD, Rustomjee Group, said, “We are in a tie-up with Singapore Keppel Land (for a DC). We are also going with the process. Both parties are exploring the potential and working out the feasibility.”

 

The industry stakeholders are banking on adoption of cloud computation, AI in India, established global connectivity through submarine cables, availability of land and power at comparatively lower costs, supportive government policies, increasing demand from hyperscalers, BFSI clients, and global tech players.

 

Samantak Das, chief economist and head, research and REIS, India, JLL, believes that as global technology firms expand their Indian presence, data centre real estate will continue to see premium valuations and institutional interest compared to traditional commercial real estate.

 

However, the growing market is also facing challenges such as a dearth of suitable land parcels, power availability, a complex regulatory environment, high operational liabilities in case of customer contract breaches, finding skilled manpower, and suitable cooling infrastructure.

 

“India’s power infrastructure remains under strain in several states, and this could become a limiting factor as the sector scales. Unlike traditional real estate, data centres are not labour-intensive or heavily reliant on specialised on-site talent, their core requirement is uninterrupted, scalable power supply,” said Shrinivas Rao, CEO, Vestian.