Data centres emerge atop in private equity investments’ share: How this could impact India’s realty sector
Private equity (PE) investment in India's real estate sector rose 25% year-on-year to $2 billion in the April-June quarter, with data centres receiving a 38% share, surpassing office-led investments.
Intelligence analysis by Llama
Data centres have emerged as a key destination for private equity investors, with inflows for the sector garnering over one-third of the total investment pie in the April-June quarter. This is a significant shift from the traditional frontrunner segment of office-led investments.
Imagine a big building where computers and servers store lots of information. This is called a data centre. It's like a big library where computers store all the information. Data centres are becoming very important because more and more people are using computers and storing information online. This is why investors are putting money into data centres because they think it will be a good place to invest.
Analysis
A $60B Vote of Confidence
Data centres have emerged as a key destination for private equity investors, with inflows for the sector garnering over one-third of the total investment pie in the April-June quarter. This is a significant shift from the traditional frontrunner segment of office-led investments. According to a report by Savills India, PE investment in India's real estate sector rose 25% year-on-year to $2 billion in this quarter, with data centres receiving a 38% share. This growth momentum is expected to continue through the rest of 2026, with new data centre capacity additions in India rising 59.3% year-on-year to 258 MW IT in H1 2026 from 162 MW IT in H1 2025. The country's total operational stock of data centres is projected to grow by around 30% year-on-year. The increased demand for digital infrastructure has resulted in a change in the preferences of investors, who are now expanding beyond office assets to invest in spaces that could yield better returns. Hyperscalers refer to giant cloud computing companies such as Amazon Web Services, Microsoft Azure, and Google Cloud that own and operate massive data centres. Microsoft, Amazon, and Google have announced expansion of their footprint in India, with Microsoft planning to open its biggest data centre in the country in 2026. The growth in data centres is expected to continue, with around 500 MW of new data centre capacity expected to be added in India during 2026. The facilitation of power and suitable land parcels for data centre development remains a critical challenge across all key data centre markets in India, requiring hyperscalers and data centre operators to explore new clusters for future expansion, with the support of local governments. The rise in investment in data centres was also seen last year, with investments in India's data centres rising 27% year-on-year to $0.48 billion in 2025, according to real estate services and investment firm CBRE's Real Estate Investment Market Outlook released in March 2026. The growth in data centres is expected to continue, with the country's total operational stock of data centres projected to grow by around 30% year-on-year. The increased demand for digital infrastructure has resulted in a change in the preferences of investors, who are now expanding beyond office assets to invest in spaces that could yield better returns. The growth in data centres is expected to continue, with around 500 MW of new data centre capacity expected to be added in India during 2026. The facilitation of power and suitable land parcels for data centre development remains a critical challenge across all key data centre markets in India, requiring hyperscalers and data centre operators to explore new clusters for future expansion, with the support of local governments.
Key points
- Private equity investment in India's real estate sector rose 25% year-on-year to $2 billion in the April-June quarter.
- Data centres received a 38% share of the total investment pie in the April-June quarter.
- The growth momentum is expected to continue through the rest of 2026.
- New data centre capacity additions in India rose 59.3% year-on-year to 258 MW IT in H1 2026 from 162 MW IT in H1 2025.
- The country's total operational stock of data centres is projected to grow by around 30% year-on-year.
If this development plays out positively, it could lead to more investment in data centres, creating jobs and stimulating economic growth. This could also lead to the development of new technologies and innovations in the data centre space.
However, there are also challenges associated with the growth of data centres, such as the need for suitable land parcels and power availability. If these challenges are not addressed, it could lead to delays or cancellations of data centre projects, which could have negative impacts on the economy and the environment.
