Market Radar: India's next growth wave will test infrastructure limits

Resilient investment and an AI-driven boom face critical tests from gridlock and water scarcity

November 11, 2025Real Estate

Key Takeaways

Investor confidence is high thanks to strong fundamentals, while real estate investment inflows reached USD 4.7 billion in the first nine months of 2025.
Growth is accelerating in alternative assets such as senior living projects and data centres, the latter supercharged by AI adoption.
This new growth is facing critical bottlenecks as the power grid strands over 50GW of renewable energy and water-intensive data centres face severe scarcity issues.

The Macro View

According to a Q3 2025 report from Colliers, the backdrop for the Indian market remains robust. GDP growth projections for FY 2025-26 have been revised upwards to 6.8%, whilst retail inflation plummeted 1.54% in September 2025. With the RBI maintaining the repo rate at 5.5%, this stability is underpinning strong investor confidence.

Underscoring this, Goldman Sachs has turned overweight on Indian stocks, forecasting the Nifty 50 Index to reach 29,000 by the end of 2026.

Trend Spotlight

The Investment Influx

A Cushman & Wakefield report reveals that Indian real estate investment inflows reached USD 4.7 billion in the first nine months of 2025, making it potentially the second-best year on record. Mumbai, in particular, crossed the USD 1 billion mark for the fourth consecutive year.

Significantly, domestic investors are strengthening the market, accounting for 48% of these inflows. This activity supports a transformative long-term vision, with Colliers projecting India's real estate sector for a 20X leap by 2047, potentially becoming a USD 5-10 trillion market.

New Frontiers and New Problems

While core assets such as office and residential remain central, Colliers notes that alternative assets have greater potential for growth due to the immaturity of the sectors. This category includes data centres and senior living.

Growth is already visible in these new frontiers:

Senior Living: This segment is gaining traction, highlighted by Hiranandani Communities' new INR 300-crore senior living project in Chennai.

Data Centres: The rise of AI has turbocharged India's data centre growth. Global real estate advisory JLL projects capacity will surge by 77% by 2027. This is fuelled by India's position as a key user of AI, as major players like OpenAI, Alphabet, and Perplexity AI are rolling out free access to their paid tiers to hundreds of millions of Indian users.

However, this explosive growth confronts two critical infrastructure challenges:

The Water Challenge: The data centre boom brings profound implications for India's decarbonisation plans. India's data centre water consumption is expected to more than double by 2030 in an already water-stressed country. This is creating a significant blind spot, with 60-80% of India's data centres predicted to face high water stress this decade.

The Grid Deadlock: To power this new infrastructure, India has a national renewable capacity goal of 500GW by 2030. However, the energy grid is yet to keep pace. Transmission has become a critical bottleneck, and more than 50GW of clean energy capacity is already stranded, unable to be dispatched.