Private equity pours $2.5 billion into real estate for data centres

Private equity investment in real estate touched $6.1 billion across 55 disclosed deals in the first nine months of 2026, close to the $6.9 billion recorded for the whole of 2025 according to a report released by FICCI and Anarock.

Of this data centres took $2.5 billion, or 40 per cent, ahead of offices at $1.7 billion.

The rapid growth of artificial intelligence and high-performance computing is driving demand for data centre capacity in the country. The report shows operational data centre capacity growing about 30 per cent to 2,200 MW in 2026. It identifies power availability, not land, as the binding constraint.

Data centres are located across the country such as Mumbai, Navi Mumbai, Chennai, Hyderabad, Bengaluru, Delhi NCR and Gujarat, said Jitin Prasada, Minister of State for Information and Technology, in reply to a question in parliament in August 2026. Centres are now expanding in states like Andhra Pradesh, Madhya Pradesh, Chhattisgarh and West Bengal which are coming up as investment destinations.

“Industry is also deploying high density racks to efficiently support high‑performance computing & AI workloads for further reduction of power and water consumption,” the minister added.

Most data centres in India have been developed by the private sector, but international experience highlights the need for appropriate safeguards before approvals are granted.

In an October 2026 report Niti Aayog pointed out that data centre projects have significant requirements for electricity, water, land and supporting infrastructure. States need a structured approach to assess these requirements alongside the economic benefits of proposed investments.

The think tank had recommended that states “plan before approval, protect local systems, secure public value and enforce delivery”. “Virginia, Dublin, Amsterdam, Johor and Bangkok show the risks when capacity outruns grid, water, land and community systems. Ireland links new projects to additional generation. Singapore and European frameworks use phased, climate-sensitive PUE (power usage effectiveness) and WUE (water usage effectiveness) assurance. Thailand and Malaysia have tightened incentive screening for resource efficiency and domestic value,” it added.