Knight Frank, in its latest report, Asia-Pacific Data Centres 2025, highlights Mumbai’s rise as India’s data centre capital. According to the report, the city leads India’s data-centre landscape accounting for 40% of total national capacity and 44% of live IT capacity.

In H1 2025, Mumbai’s capacity rose 14.3% to surpass the 4GW milestone, with 591MW operational, 185MW under construction, and 3.2GW in the pipeline. This growth builds on India’s data centre market surpassing 10GW in H2 2024, supported by 1.4GW live and 400MW under construction.

Rapid cloud adoption, increasing data localisation requirements, as well as the growth of local fintech and BFSI firms has been fuelling data-centre demand. Over the past six months, Mumbai recorded 97.6MW of take-up. This has translated to a tight vacancy rate of just 5.4% vs. India’s overall colocation vacancy rate at 12.3%. Demand-side commitments seem resilient with absorption broadly keeping pace with the multi-fold growth in supply over the past years. Also, two-thirds of Mumbai’s capacity under construction at present is already pre-leased.

Yet, with just three live sites currently capable of supporting hyperscale deployments (>2.5MW) and only one site with available capacity of more than 10MW, there seems to be a short-term supply tightness for big-ticket requirements. Distribution of available live capacity is skewed toward smaller deployments: 10 sites offer <1MW, 5 sites fall in the 1–2MW range, while only 3 sites provide >3MW.

Such fragmented deployments are opening doors for well-capitalized global players and joint ventures to deliver high-capacity facilities in the region that is currently dominated by local players. The 500MW NAV2 campus announced by NTT and another 500MW AI facility by Blackstone-Panchshil Realty are case in point.

Also, operators with large-scale requirements are exploring alternative markets. Hyderabad is positioning itself as a hyperscale-first market, with over 500MW of new data centre capacity currently in the pipeline through two projects. STT GDC India has signed an MoU with the Telangana government to develop a 100MW campus, while NTT has committed INR 10,500 crore (approximately USD 1.25 bn) to establish a 400MW AI-focused data centre campus.

Hyderabad is the second largest data centre market in India with 2.1GW of total capacity, followed by Chennai (1.6GW), New Delhi (712MW) and Bengaluru (307MW).

Shishir Baijal, Chairman & Managing Director, Knight Frank India, said: “Mumbai has firmly established itself as the epicentre of India’s digital infrastructure growth. With over 3GW of capacity in the pipeline and strong policy support for green data centre parks, the city is attracting sustained global investment. As cloud adoption and AI workloads accelerate, Mumbai’s unique strengths, its robust subsea cable connectivity, scalable power infrastructure, proximity to enterprise hubs, and progressive state policies are consolidating its position as India’s data centre capital. While other metros like Chennai, Hyderabad, and Bengaluru are gaining traction, none match Mumbai’s scale, speed, and ability to serve as South Asia’s gateway for cloud, AI, and enterprise workloads.”

Regional Context

In the first half of 2025, the APAC region secured nearly 13GW of new project announcements, a 160% increase and more than double the 5GW announced in the same period last year. The funding needed for these projects already exceeds US$180 billion.

Major technology firms are driving much of this investment. Amazon is projected to exceed US$100 billion in capital expenditure for 2025, up from about US$82 billion last year, while Microsoft invested US$55 billion in 2024 and has committed more than US$33 billion this year. Collectively, Microsoft, AWS, Google, and Meta have committed over US$160 billion in 2025 alone, reflecting the intensity and scale of current infrastructure development.

Fred Fitzalan, Head of Data Centres Asia-Pacific, Knight Frank says, “The sheer volume of new projects in the region highlights just how important the region has become in the global digital infrastructure landscape. However, coordinating this rapid growth is a complex challenge, as operators must keep pace with advances in technology and rising energy needs, all while ensuring new facilities are delivered in step with evolving demands.”

Alongside the hyperscalers, GPU-as-a-Service providers are expanding rapidly, seeking multi-megawatt capacity across the region and bringing greater diversity into leasing conversations. Creditworthiness and shortened deployment timelines remain perennial challenges, but innovative guarantee structures are enabling some operators to compete effectively for new contracts.

Fred Fitzalan adds, “What has become clear is the strict requirement for operators to design facilities with capacity that can be flexibly deployed for either Cloud or AI workloads, offering tenants maximum optionality. While this adds cost, it is now a decisive factor in site selection. Locations that combine proximity to parent sites with sufficient power allocations to support long-term runway are winning out, although this remains a significant challenge given national grid constraints and permitting delays in Tier 1 APAC markets.”

Johor (located in Malaysia) established itself as Southeast Asia’s fastest-growing data centre hub, with aggregate supply nearly doubling over the last 12 months to 5.8GW in Q2 2025, including 2.0GW of new project announcements, backed by strong government support and the rollout of national Data Centre Planning Guidelines.

Take-up: Johor recorded 260.0MW of take-up in the first half of 2025, with social media accounting for 61% and the remainder driven by AI demand. The market is now highly constrained, with a vacancy rate of just 1.1%, as planning becomes more challenging and power shortages coming through.

Tokyo continues to hold its position as a key regional hub with aggregate capacity exceeding 4.2GW, a 2.7% increase on volumes recorded at the end of Q2 2024. Investment activity remains strong, highlighted by Ares completing a US$2.4 billion Japan-focused fund through Ada Infrastructure, while Mitsui & Co. Asset Management’s US$122 million acquisition signals sustained domestic investment appetite.

Take up: Over the past six months, Tokyo recorded 41.1MW of capacity transacted. This is a slowdown from the first half of 2024, when 286.6MW was transacted, due to reduced supply in the market. Tokyo continues to be a tightly constrained market, with colocation vacancy rates at just 7.0%.

Melbourne is stepping out of Sydney’s shadow, with total supply nearly tripling to 4.7GW as of Q2 2025, as land and power constraints push development south. The city now hosts dedicated cloud regions from all four major US providers: AWS, Microsoft, Google, and Oracle, with 95% of colocation take-up driven by AI workloads. Live IT capacity is now 337.1MW, marking a 25.4% year-on-year increase. This growth trajectory is expected to continue, supported by a pipeline of 934.8MW in committed and under construction projects.

Take-up: In the first half of 2025, Melbourne saw 127.6MW of transacted capacity, with artificial intelligence remaining a primary driver of demand and representing 95% of all colocation take-up.

Seoul’s investor appetite remains strong. LG U+ is set to grow its 87.2MW footprint with a US$441.7 million investment in a new AI-focused data centre. Meanwhile, Macquarie Asset Management has acquired the 40MW Hanam Data Centre for around US$538.4 million. No new capacity has been added to the market since Q3 2024, keeping total supply steady at 1.8GW.

Take-up: In the first half of 2025, Seoul recorded 86.2MW of leasing activity, with 85% of that occurring in the second quarter. Demand was split between enterprise users and public cloud providers, alongside an emergence of Chinese tenants entering the market in a bid to diversify their AI strategies across APAC.

Investment Evolution

The funding landscape is evolving, with infrastructure and private equity capital increasingly partnering with operators on developer-led powered shells to achieve faster time-to-power deployment.

Looking ahead, grid capacity and power availability remain major constraints, with geopolitical considerations shaping project delivery timelines. Despite these challenges, momentum remains strong. Cloud providers in the US and China now often compete for the same capacity, driving up rental values, particularly in North Asia. Additionally, the AI ecosystem continues to expand beyond traditional hyperscale deployments. The task ahead is to synchronise these vast expansions with technology evolution and energy demand, building digital infrastructure that is both flexible and future ready.

Private equity participation, rising from USD 500 mn in 2011 to multi-billion-dollar highs by 2019, has enhanced transparency, deepened institutional confidence, and paved the way for REIT expansion across India’s thriving CRE landscape. As urbanisation, technology, and progressive policy reforms continue to reshape the sector, India’s CRE stands poised to unlock the next wave of opportunity across asset classes.

Retail consumption across the organised formats is estimated at a value of INR 8.8 Tn for FY 2025. Led by shopping centres (INR 4.9 tn), high streets (INR 3.8 tn), and other new-age formats such as airport and transit retail. This expansion reflects a clear shift toward experience-driven, consumer-centric destinations where shopping intersects with lifestyle and leisure.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “India’s CRE transformation is being led by businesses that are more global, technology-driven and experience-focused than ever before. Consolidation in office demand, resilient retail growth and the rapid expansion of digital infrastructure have fundamentally reshaped occupier behaviour. Today, companies want efficient, green, future-ready spaces, and capital markets are rewarding that shift. As India heads toward a USD 7 tn economy, CRE will play an essential role in powering productivity, attracting investment and building next-generation urban centres.”

REITs: Deepening Market Participation

India’s REITs have a potential to diversify beyond traditional asset classes like office, retail, and warehousing, to industrial parks, data centres, and hospitality. Listed REITs have delivered stable average annual dividend yield of about 5.5%, making them attractive income-generating vehicles. By 2030, India’s REIT market (including office, retail and warehousing sectors) is projected to reach INR 19.7 tn. India currently has five listed REITs covering about 177 mn sq ft of commercial and retail space spanning operational, under-construction, and upcoming assets worth approximately INR 2.3 tn with over 290,000 unitholders.

Office REITs

India’s office REITs account for just 15.3% of the total office stock across the top eight cities[1], signalling strong potential for institutional growth. Demand from Global Capability Centres (GCCs) and India-facing businesses continues to strengthen, supported by a steady leasing pipeline and occupier preference for premium, sustainable workspaces. The value of REIT-able office assets is expected to rise from INR 8.2 tn in 2025 to INR 16.0 tn by 2030, nearly doubling in five years. With substantial prime office assets yet to enter REIT structures, broader participation from developers and investors will define the next growth phase for India’s office REIT market.

Retail REITs

Retail REITs are emerging as a new frontier for India’s real estate market amid a strong revival in organized retail. With only 7.3 mn sq ft of Grade A stock currently under REITs, out of a total of 66 mn sq ft of Grade A stock, there is significant headroom for institutional expansion. The value of REIT-able retail assets is projected to grow from INR 1.5 tn in 2025 to INR 2.4 tn by 2030, driven by rising consumer demand and the shift toward formal retail formats. As malls, lifestyle hubs, and mixed-use developments proliferate, retail REITs offer a structured, transparent way for investors to participate in India’s consumption-led growth story.

Warehousing and Industrial REITs

Warehousing has emerged as one of the most promising future avenues for REITs in India. Fuelled by e-commerce and third-party logistics (3PL) growth, leasing activity reached 32.1 mn sq ft in H1 2025. The top eight warehousing markets collectively hold 220.9 mn sq ft of Grade A stock, offering vast institutional potential. As technology-enabled, high-quality logistics facilities gain traction among occupiers, industrial and warehousing REITs or InvITs are expected to be launched in the next few years. Value of REIT/InvIT can potentially grow from INR 0.7 tn to INR 1.3 tn by 2030.

Neel Raheja, Chair, CII National Committee on Real Estate & Housing, and Group President, K Raheja Corp, said, “The partnership between CII and Knight Frank underscores a shared commitment to advancing India’s built environment. As commercial real estate matures, it will play a pivotal role in shaping investment flows, employment, and urban transformation. The sector’s progress mirrors India’s broader economic journey—where potential is abundant, and the time to seize opportunity is now.”

Office: Navigating Supply Constraints and Unlocking Growth

India is world’s fourth largest office market (valued at INR 16.4 tn (USD 186 bn) and now it has crossed the 1 bn sq ft milestone in 2025. Over two decades, office stock expanded at a CAGR of 8.6%, underscoring structural resilience and sustained investor appetite.

Between 2008 and 2024, gross leasing activity grew 5% CAGR, while new completions rose just 1%, tightening the supply-to-demand ratio from 1.40 in 2008 to 0.49 in 2025. The report notes that several top developers have shifted focus to residential projects for higher margins and quicker returns, deepening supply constraints.

To achieve the next milestone of 2 bn sq ft, India’s office sector must blend expansion with optimisation through policy incentives, public-private partnerships/JVs and institutional capital. Integrating green certifications early in the planning process is increasingly seen as best practice, enhancing ESG alignment and unlocking additional FSI. Notably, 31% of existing office stock offers retrofitting potential, while 12% of SEZ assets can be adaptively reused, creating scope for sustainable growth.

Retail: Experience, Scale, and Renewed Investor Confidence

Across organised formats, retail consumption is estimated at a value of INR 8.8 tn for FY 2025, driven by the expansion of shopping centres, high streets, and emerging formats such as airport and transit retail. Since 90% of the market is unorganised, this presents a huge opportunity to the sector to tap on the consumption boom. This growth underscores a significant transition toward experience-led, consumer-centric retailing, where shopping is increasingly intertwined with lifestyle, leisure, and entertainment.

Shopping Centres continue to dominate the organized retail landscape, accounting for INR 4.9 tn, followed by high streets at INR 3.8 tn and airports contributing INR 0.1 tn. This tiered structure illustrates the evolution of retail into a multi-format ecosystem catering to distinct consumption behaviours. While shopping centres are hubs for curated experiences and brand visibility, high streets retain strong local loyalty and sustained footfall. Despite having a smaller share, airport retail delivers the highest revenue per square feet.

Across all formats, Apparel and Food & Beverages remain the dominant categories, contributing 50–60% of total revenues in shopping centres and high streets, and over 75% in airport retail. These segments anchor consumption patterns and continue to attract new entrants, reflecting the sector’s alignment with aspirational, lifestyle-led spending.

The report highlights that Tier 2 and Tier 3 cities are emerging as the next growth frontiers, fuelled by increasing disposable incomes, expanding urbanization, and the proliferation of national and regional brands. Developers are responding with smaller, agile shopping centre formats and mixed-use retail destinations designed to optimize footfall and experience.

After two cautious investment years, private equity inflows into retail real estate have touched USD 500 mn year-to-date in 2025, signalling renewed investor confidence. The resurgence is driven by consumption growth, improving rental yields, and the formalization of retail operations.

In parallel, sustainability and technology integration are shaping the sector’s next phase. Smart shopping centre management systems, energy-efficient operations, and digital engagement tools are being adopted to enhance tenant and customer experience. The report notes that the retail sector’s ability to blend technology with human experience will be key to maintaining its growth momentum.

India’s retail story is no longer just about expansion, it is about evolution and resilience. As consumers seek more immersive, meaningful, and value-driven experiences, the sector is redefining how space, experience, and community come together to create long-term value for investors, brands, and consumers alike.

Data Centres: India’s Fastest-Growing CRE Segment

Data centres are now India’s fastest-growing commercial real estate asset class, with total capacity crossing 10 GW (1.4 GW operational and an additional 8.8 GW in the pipeline). Fuelled by 5G, AI, cloud adoption, and data localisation, the sector could see a sevenfold rise in live capacity.

The report identifies key priorities to sustain growth: addressing power availability and reliability, mapping future energy demand, and incentivizing renewable sourcing. It also calls for developing training ecosystems and a harmonized national regulatory framework to align with global best practices. India’s opportunity lies in leapfrogging conventional growth by adopting renewable energy strategies, grid-readiness models, and innovation partnerships seen in mature markets.

Viral Desai, Senior Executive Director Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Retail Agency, Knight Frank India, said, “India’s commercial real estate has moved from promise to performance. With office stock crossing 1 bn sq ft and retail consumption as estimated to be INR 8.8 tn for FY 2025, we are witnessing a maturing cycle supported by strong governance, foreign capital and a confident domestic economy. As REITs scale from INR 10.4 tn to a projected INR 19.7 tn by 2030, the focus must shift to quality supply, sustainability and global-standard asset management. The real opportunity lies in converting this built momentum into long-term, inclusive economic value.”

India’s commercial real estate stands at an inflection point, its potential firmly built, and its opportunity unfolding now. As each asset class matures and new capital pathways emerge, the sector is set to play a deeper role in shaping the country’s economic narrative. With structural reforms, sustainability imperatives, and technology-led transformation aligning in its favour, India’s CRE is evolving from a growth story into a story of enduring strength, institutional depth, and global relevance.