Indian REITs Eye Data Centres as AI Demand Drives Growth

Indian REITs are entering data centres as AI and cloud demand rises. CLINT and Mindspace are expanding in the segment, but high capital costs, power needs and longer project timelines require careful investment and funding strategies.

India’s office-focused Real Estate Investment Trusts (REITs) are increasingly expanding into data centres as the rapid adoption of artificial intelligence (AI) and cloud computing drives demand for digital infrastructure. The shift marks a strategic move beyond traditional commercial office assets, although high development costs and longer project gestation periods present significant challenges. 

Data centres require substantially higher capital investment than conventional office properties. Industry estimates indicate that developing 1 MW of data-centre capacity can cost more than ₹96 crore, with expenditure covering land, specialised cooling systems, power infrastructure and other technical requirements. The capital-intensive nature of these projects means REITs need to carefully manage investment and funding structures.

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CapitaLand India Trust (CLINT) is among the REITs pursuing opportunities in the sector. Its 50 MW data-centre facility in Navi Mumbai begins contributing income in August 2026. To manage capital requirements, CLINT earlier sells a 20.2% stake in three under-development data-centre assets to the CapitaLand India Data Centre Fund, allowing it to recycle capital while continuing to participate in the segment.

Mindspace Business Parks REIT is also expanding its presence through a partnership with Princeton Digital Group. Its completed and planned data-centre portfolio is expected to comprise five facilities, reflecting a strategy of combining established real-estate capabilities with specialised data-centre expertise.

The growing interest in data centres is closely linked to India’s accelerating digital economy. AI workloads require significant computing capacity, while cloud adoption, digital services and enterprise technology investments are increasing demand for reliable data-storage and processing infrastructure. Mumbai has already entered the global top 15 data-centre markets, while Hyderabad is emerging as one of the fastest-growing hubs.

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However, data-centre assets have longer development and stabilisation timelines than conventional office properties. This could limit participation to well-capitalised REITs with strong balance sheets or access to strategic technology and infrastructure partners.

For India’s REIT sector, the move into data centres represents an opportunity to participate in the country’s AI-led infrastructure expansion while diversifying portfolios. The success of this strategy will depend on balancing high upfront investment with long-term income generation and maintaining stable returns for investors.