Data centres attracted $2.5 billion in private equity investment in Indian real estate during the first nine months of 2026, overtaking offices to become the sector’s largest investment destination, according to a report by the Federation of Indian Chambers of Commerce and Industry (FICCI) and property consultancy Anarock.
Private equity investment in Indian real estate reached $6.1 billion across 55 disclosed deals between January and September 2026, compared with $6.9 billion for the whole of 2025. Data centres accounted for 40% of the investment, while offices attracted $1.7 billion.
If the pace continues, 2026 could record the highest annual private equity investment in Indian real estate since 2007, the report, The Changing Landscape of Real Estate Investment in India, said.
Domestic funds take a bigger slice of real estate deals
Domestic funds invested $2.6 billion in Indian real estate during the first nine months of 2026, compared with $400 million in 2020. Their share of private equity investment by value rose from 8% to 42% over the period.
Domestic investors accounted for 48% of inflows in the first half of financial year 2026-27, three times their share in financial year 2024-25, the report said.
Foreign capital has also continued to grow. Investments from overseas sources increased at an annual rate of about 19% between 2021 and 2025, reaching $4.9 billion.
The composition of funding has shifted towards equity. Equity accounted for 83% of inflows in the first half of financial year 2026-27, while structured debt fell to 16%, compared with 32% in financial year 2022-23.
Data centre expansion runs into a power constraint
India’s operational data centre capacity is projected to grow by about 30% to 2,200 megawatts (MW) in 2026 and exceed 6.7 gigawatts (GW) by 2030. Announced commitments to the sector have crossed $300 billion, according to the report.
Data centre assets in India are valued at $10 million to $15 million per MW, compared with $20 million to $30 million in the United States and Singapore. The report identifies power availability, rather than land, as the main constraint on capacity expansion.
Investment is also extending beyond the country’s largest cities. The Mumbai Metropolitan Region accounted for 49% of private equity investment by value between 2021 and 2025. Tier II cities, which currently account for 3-4% of investment, recorded 20 deals in 2021-25, up from 11 in 2016-20. The number of cities attracting such deals increased from eight to 12.
Around 45% of branded hotel keys signed in the first half of 2026 were in Tier III and Tier IV cities. Meanwhile, 1.4-1.6 GW of data centre capacity is planned outside the six largest cities.
Multi-city platforms accounted for 49% of private equity inflows in the first half of financial year 2026-27, linking investment across markets, the report said.
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Residential real estate also recorded growth, with sales in the top seven cities reaching ₹6.1 lakh crore in financial year 2025-26, more than double the level in financial year 2021-22. However, the share of high-end and luxury homes in new supply rose to 45% from 13%, while affordable housing’s share declined to 14% from 25%.
The report estimates that India’s real estate sector, valued at about $600 billion in 2025, could reach $1 trillion by 2030. Its contribution to gross domestic product is projected to increase to 13% by 2030, from about 6% in 2017.
It also said no single source of capital would be sufficient to fund the next ₹10 lakh crore of investment in the sector. At the pace recorded between 2021 and 2025, private equity could contribute about $55 billion over the next decade.
The report identifies early-stage funding as a gap, partly because the Real Estate (Regulation and Development) Act requires 70% of buyer collections to be held in a separate account. It expects platform equity, structured private credit and exits through Real Estate Investment Trusts (REITs) and Small and Medium Real Estate Investment Trusts (SM REITs) to play a role in meeting future funding needs.
Raj Menda, chairman of the FICCI Committee on Urban Development and Real Estate and chairman of the supervisory board at RMZ, said “Deepening domestic capital markets, REITs, small and medium REITs and alternative investment funds, making it easier to build and taking growth beyond the largest metros are the three priorities for industry and government.”
