Real estate developers Lodha and Mindspace Business Parks REIT could see meaningful upside as India's rapidly expanding data centre sector creates new growth opportunities for property companies, according to a report by Morgan Stanley.
The brokerage said the two companies have the highest exposure among the firms it tracks to the emerging data centre ecosystem, which spans land acquisition, development of data centre shells and eventual monetisation through real estate investment trusts (REITs).
Morgan Stanley estimates that data centre-led growth alone could add more than 20% upside to the valuations of both companies over time.
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Data Centre Capacity Set for Rapid Expansion
India's installed data centre capacity is projected to rise sharply to around 10.5 gigawatts by financial year 2031, up from about 1.8 gigawatts in FY26, Morgan Stanley said.
This surge in capacity will be driven by a wave of global artificial intelligence investments and rising demand for cloud infrastructure. The brokerage estimates the expansion could translate into roughly $60 billion of investment over the next five years.Construction costs in India are also around 30% lower than in many Asia-Pacific markets, improving project economics.
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Why Developers Are Key to the Ecosystem
Property companies play a central role in enabling data centre development, like access to large land parcels, experience navigating regulatory approvals and expertise in constructing and leasing large commercial assets. Morgan Stanley noted that once operational, data centres generate stable and predictable income streams similar to office properties, but with faster development timelines and stronger rental growth prospects.
Despite construction costs being roughly 20% higher than conventional commercial buildings, data centres can deliver yields of around 13–16%, significantly higher than the typical 10–11% returns seen in office real estate.
Beyond Lodha and Mindspace REIT, Morgan Stanley said other developers such as DLF and Prestige Estates also have exposure to the data centre opportunity. However, the brokerage believes Lodha and Mindspace stand to benefit the most due to their development pipelines and ability to monetise assets through REIT structures.
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