Synopsis: India’s AI-led data centre expansion is set to unlock a Rs. 2 trillion infrastructure opportunity, positioning select real estate developers with strong land banks, execution capabilities, and strategic partnerships to benefit from long-term demand growth.
The rapid growth of artificial intelligence (AI), cloud computing, and digital services is driving a surge in demand for data centres across India. As businesses require greater computing power and storage capacity, developers with suitable land, infrastructure, and execution capabilities are increasingly positioned to benefit from this long-term structural trend.
Unlike traditional residential or commercial projects, data centres offer real estate companies an opportunity to generate stable, long-term rental income through partnerships with global hyperscalers and enterprise clients. With India expected to attract nearly Rs. 2 trillion of investments in data centre infrastructure over the next five to seven years, select realty players are emerging as key beneficiaries of this expanding market.
AI Data Centres Emerge as the Next Growth Engine for Realty
The rapid adoption of artificial intelligence (AI), cloud computing, and hyperscale digital infrastructure is creating a significant long-term opportunity for India’s real estate sector. Data centres are increasingly being viewed as a strategic asset class rather than just a diversification avenue, with developers expected to benefit from rising demand for specialized infrastructure over the coming decade.
Analysts believe the market is pricing in the long-term potential of data centres rather than immediate earnings, as most announced projects are still under development. While the sector offers substantial growth prospects, meaningful revenue and profit contributions are expected to materialize only over the next three to five years.
Demand Expected to Accelerate Sharply
India’s data centre demand is projected to witness exponential growth over the next decade. The country’s IT load is expected to increase from around 1.6 GW in FY26 to nearly 5 GW by FY30, before reaching 14–15 GW by FY35. Correspondingly, the built-up area required for data centres is estimated to expand from approximately 25 million square feet (msf) to nearly 160 msf over the same period.
To support this expansion, industry estimates suggest that Rs. 1.6–2 trillion will be invested in data centres over the next five to seven years. However, nearly 60 percent of the planned capacity remains at the planning or early execution stage, indicating that the investment cycle is still in its initial phase.
Execution Capabilities to Drive Competitive Advantage
Unlike conventional commercial real estate, success in the data centre business depends on specialised infrastructure and execution capabilities rather than land ownership alone. Developers require access to an uninterrupted power supply, high-speed fibre connectivity, faster regulatory approvals, and partnerships with global hyperscalers or specialist operators.
The business is also highly capital-intensive, with development costs estimated at Rs. 80–100 crore per megawatt, significantly higher than those for traditional office buildings. As a result, companies with strong balance sheets and proven execution capabilities are expected to enjoy a competitive advantage.
Power Availability Remains the Biggest Challenge
Despite the favourable demand outlook, analysts identify power availability as the biggest bottleneck for the industry’s expansion. Data centres require continuous and reliable electricity, making investments in transmission infrastructure and dedicated power arrangements critical to support future capacity additions.
Project execution timelines also remain lengthy, with most facilities taking three to four years to become operational and achieve stabilized occupancy. As recurring revenues begin only after completion and tenant onboarding, the data centre opportunity is widely viewed as a long-term growth story rather than a near-term earnings driver.
Limited Near-Term Impact on Valuations
Although investor interest in the segment has increased significantly, data centres currently contribute only a small portion of the valuation for most listed real estate companies. Market participants are increasingly distinguishing between companies that already have operational assets or advanced execution capabilities and those that are still at the MoU signing, planning, or land acquisition stage.
Going forward, successful execution, operational capacity, and the ability to secure long-term customer contracts are expected to play a much larger role in determining valuation premiums than project announcements alone.
Stocks to benefit
Lodha Developers Ltd
Lodha has emerged as one of the most aggressive players in India’s data centre space. The company plans to develop around 1 GW of build-to-suit data centre capacity at Palava near Mumbai, with an estimated investment of Rs. 10,000–11,000 crore. Additionally, it has committed Rs. 1 trillion towards developing a 2.5 GW data centre park in Maharashtra, positioning itself as a long-term infrastructure player. With a market capitalisation of Rs. 1,19,794 cr, the shares of Lodha Developers Ltd closed at Rs. 1199 per share, up from its previous close of Rs. 1,188.95 per share.
Anant Raj Ltd
Anant Raj is significantly expanding its presence in the data centre business through large capital commitments. The company has announced an investment of Rs. 20,000 crore for data centre projects in Haryana, adding to its earlier commitment of Rs. 4,500 crore for similar developments in Andhra Pradesh, reflecting its focus on building large-scale digital infrastructure. With a market capitalisation of Rs. 21,938 cr, the shares of Anant Raj Ltd closed at Rs. 609.60 per share, up from its previous close of Rs. 600.60 per share.
Mindspace Business Parks REIT
Mindspace Business Parks REIT is strengthening its data centre portfolio through a strategic partnership with Princeton Digital Group. The REIT is developing over 1 million square feet of data centre space in Navi Mumbai, leveraging its commercial real estate expertise to cater to the growing demand from hyperscale and enterprise customers. With a market capitalisation of Rs. 32,889 cr, the shares of Mindspace Business Parks REIT closed at Rs. 496.83 per share, up from its previous close of Rs. 495.08 per share.
DLF Ltd
DLF is regarded as one of the well-positioned real estate developers to benefit from the expanding data centre opportunity. The company’s extensive land bank, strong execution capabilities, and financial strength provide it with the flexibility to participate in future data centre developments as demand continues to grow. With a market capitalisation of Rs. 1,66,749 cr, the shares of DLF Ltd closed at Rs. 673.65 per share, up from its previous close of Rs. 668.15 per share.
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