Data Centres Are Reshaping Real Estate Investing

India's Real Estate Trusts Are Betting On Data Centres For Higher Returns

By Katya Naidu

What?

India's listed Real Estate Investment Trusts (REITs) market is swelling in size, gaining in market cap and rivalling that of the Hong Kong market, another fast-growing hub. The five listed REITs have assets to the tune of 195 million sq ft with an upcoming pipeline of around 37 million sq ft as of March 2026, as per a Colliers report. 

Yet, most of their assets — around 84% of the operational portfolio of these REITs belong to the office space segment. To diversify their portfolio and avoid concentration risk, they are eyeing data centres. 

As India's commercial real estate market evolves, REITs are weighing whether data centres can bring in higher yields and long-term cash flows needed to complement portfolios still dominated by office properties.

Why? 

Data centres provide the REIT with an entry into the new-age business themes of AI, on top of its investments into office spaces with business parks. 

“A diversified portfolio allows us to benefit from different growth opportunities within commercial real estate. Mindspace REIT is currently the only REIT listed in India with data centres as part of its portfolio, reflecting our approach of combining our core office business with emerging opportunities,” Ramesh Nair, CEO & MD of Mindspace REIT, told The Core. 

According to Bernstein, the key differentiator in India's data centre market is the combination of land and power. REITs already control one half of that equation through their large land banks and expertise in developing commercial real estate, positioning them to expand into data centres.

“Data centres are becoming an important part of the real estate market as demand for cloud, AI and digital services continues to grow. They complement our office portfolio and give us exposure to a fast-growing segment. We see this as an important long-term opportunity that strengthens the overall portfolio while keeping us aligned with evolving business needs,” said Nair.

Why It Matters

According to Shobhit Agarwal, CEO of Anarock Capital, data centres have become one of the best-performing types of real estate. He reckons that mostly the bigger and more specialised REITs do it first, because data centres need space, power, and technical know-how. 

“The REIT world as a whole will probably be cautious until the business model is proven and cash flows can be seen,” he said.

While Indian REITs are proceeding with caution, internationally, REITs like Equinix and Digital Realty in the US are key players in the data centre space.

While its uptake is increasing, the slice of data centres in the total listed REIT pie is all but negligible as per a report by Credai and Anarock as of 2025 – with 80% of office spaces and the rest being industrial. 

For now, data centres remain a small slice of India's listed REIT market rather than a defining asset class. But as AI adoption accelerates, cloud demand grows, and institutional capital chases long-term, predictable cash flows, the sector is likely to become an increasingly important part of REIT portfolios.

Apple’s Starlink Update Sparks Huge Earning Opportunity

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7.3%

That's how much India's industrial output grew year-on-year in June, its fastest pace since July 2024, and accelerating from a revised 5% in May, according to government data released Tuesday. The surge was driven by robust manufacturing activity, higher government spending and continued growth in electricity generation.

Fast Facts: Manufacturing output rose 7.8% in June, up from 5.2% in May, while electricity generation climbed 10.6%, slightly ahead of May's 10.3% increase. Mining activity rebounded with 1% growth after a 1.4% contraction the previous month. Consumer durables output, including cars and phones, grew 7.7%, while capital goods output rose 14.2%, both slightly slower than in May.

Setup: Rajani Sinha, Chief Economist at CareEdge Ratings, said India's industrial sector has held strong momentum despite global uncertainties and high energy prices, though elevated input costs remain a key risk. She added that the monsoon's impact on kharif production and rural demand will be critical to watch, though recent sowing data offers an early positive sign.

Industrial output for April-June grew 5.8%, up from 3.4% a year earlier.

SC Backs Peaceful Cockroaches

The Supreme Court on Tuesday ordered the release of all minors arrested during the recent CJP-led protests over the NEET paper leak and barred coercive action against student protesters with no criminal record.

A bench led by Chief Justice Surya Kant also directed authorities to preserve all CCTV, drone, body-camera and PCR footage from the protests, while ensuring protesters' personal and digital data is not made public. 

The Court said the right to peaceful protest is constitutionally protected and that participation in demonstrations alone cannot justify police excesses.

Pivot: The order came a day after the Cockroach Janata Party said government representatives had shared draft notifications from Bihar and Assam promising to withdraw FIRs, release detainees and refrain from further action against protesters. 

The group had also said it expected a written assurance from the Union government by Tuesday. But no such assurance was made public. 

Government sources later disputed CJP's account, telling The Indian Express that no promise had been made to spare those accused of violence, and that any action would depend on the law taking its course.

Flashpoint: Further, a petition before the Delhi High Court challenges Delhi Police's use of AI-powered facial recognition vans and continuous video monitoring at Jantar Mantar, arguing the technology amounted to indiscriminate surveillance that violated protesters' rights to privacy, free speech and peaceful assembly. The Centre has defended the practice, saying the technology was used only to maintain law and order and identify known criminals.

India Turns To US For LPG

India plans to buy up to a quarter of its LPG imports from the United States in 2027, cutting reliance on the Middle East after supply disruptions caused by the Iran war and closure of the Strait of Hormuz earlier this year, sources told Reuters.

Fast Facts: India bought about 90% of its 21.85 million metric tons of LPG imports from the Middle East in 2025, with imports accounting for 66% of domestic consumption. Lower Middle East supplies curtailed India's LPG consumption to about 14.7 million tons in January-June 2026, down 8% from a year earlier, while imports fell about 28% to 7.5 million tons.

US LPG imports topped 1 million tons in June for the first time and are likely to exceed India's initial 2026 annual-contract target of 2.2 million tons.

Forecast: The move also serves a trade purpose — higher US energy purchases would help India narrow its trade surplus with Washington as New Delhi pushes to complete a trade deal in the next three to four months.

India has pledged to increase US energy purchases by $10 billion to $25 billion, and the two nations have agreed to target $500 billion in bilateral trade by 2030.

Air India's Rocky Road Ahead

Tata Sons said Air India's turnaround could take up to a decade, extending the timeline for the carrier's recovery, Chairman N Chandrasekaran said in the company's annual report. The comment comes as India's second-largest airline grapples with airspace closures, higher fuel costs from the conflict in West Asia, and the fallout from a deadly plane crash last year.

The Lead: Chandrasekaran said the turnaround will take time due to persistent supply-chain disruptions in key components, the need to overhaul legacy systems, culture and fleet, and efforts to build a larger technical and airline workforce.

The timeline also marks a departure from Vihaan.AI, the five-year plan unveiled in September 2022 by then CEO Campbell Wilson, who is set to step down on September 30 after serving his notice period, with no successor named yet.

Catch Up Quick: Air India reported a wider net loss of Rs 222.38 billion for the financial year ended March 2026, compared with Rs 108.59 billion a year earlier.

India’s Solar Grids Can't Keep Up

India held back 8,133 GWh of solar power in the April-June quarter, as the grid struggled to absorb the surge in renewable electricity.

The curtailment, 2,417 GWh in April, 3,235 GWh in May and 2,481 GWh in June, was carried out to maintain grid security, Minister for Renewable Energy Yesso Naik said in a written statement.

Context: Installed solar capacity stood at approximately 150 GW as of March 2026, up from just under 100 GW in early 2025 for India.

The country is targeting 500 GW of total renewable capacity by 2030, against the current 288 GW.

Critical Moment: But transmission networks have not kept pace. New plants are coming online ahead of schedule while grid infrastructure lags, forcing the government to curtail output rather than risk instability.

Adding capacity is no longer the only challenge; getting that power to consumers is now equally critical.

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Markets Track Oil Prices, Look For Consumption Signs

On Episode 934 of The Core Report, financial journalist Govindraj Ethiraj talks to Pooja Goyal Sharma, Founding CEO at the Udaiti Foundation as well as Shankkar Aiyar, economic journalist, columnist and author.

• Markets Track Oil Prices, Look For Consumption Signs

• Monsoon Revives, Industrial Output Up, The Latest Numbers 

• The Arithmetic Behind Power And Political Anxiety In Recent Student Protests

• SpaceX Loses $1.2 Trillion In Market Cap, Or Entire Tesla

• Why Are Urban Women Not Finding More Jobs?

• And The Airport That Is Rated Best Despite No Flights