India’s real estate sector is witnessing a paradigm shift. Traditional investments like office spaces and malls are being overtaken by high-growth, future-focused segments: data centres and warehousing. These are not mere structures but essential components of the country’s digital economy and e-commerce ecosystem. As long-term infrastructure investments, they offer stable returns, lower risk, and strategic value – positioning them as the next big trend in real estate.

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1. Growth of Data Centres in India

India’s data consumption is skyrocketing with the rise of mobile internet, cloud computing, and AI. This has catalyzed demand for data centres, massive facilities housing servers and IT infrastructure. Cities like Mumbai, Chennai, and Hyderabad are emerging as major hubs due to:

• Reliable power and cooling infrastructure
• Access to undersea cable landing stations
• Government incentives and fast-track approvals

Major players such as AdaniConneX, STT GDC, and Reliance are spearheading this growth. India is expected to double its data storage capacity by 2026, offering strong potential for investors.

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2. Warehousing Surge Driven by E-commerce

The boom in e-commerce and 3PL logistics has revolutionized warehousing. Companies like Amazon, Flipkart, and Reliance Retail require large, well-connected warehouses near urban centres.

Top warehousing clusters include:

• Bhiwandi (Mumbai)
• Pune
• Hosur (Bengaluru)
• NCR
• Hyderabad

Warehousing now goes beyond storage – it’s about strategic inventory management and last-mile delivery, making it a cornerstone of India’s supply chain infrastructure.

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3. Why Infrastructure Assets Are Attracting Investors

Post-pandemic, investors have grown cautious of retail and commercial office spaces due to high vacancy and lower returns. In contrast, infrastructure real estate offers:

• Long lease terms (up to 20 years)
• Low tenant turnover
• Higher annual rental yields (8-11% for data centres)
• Essential service classification

Global and domestic funds are shifting to these assets for stable, inflation-protected returns.

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4. Strategic Location Considerations

Location is critical for success:

Data Centres Require:

• Continuous, high-quality power
• Access to fibre optic networks
• Proximity to tech parks and city cores

Warehouses Need:

• Connectivity to national highways and ports
• Proximity to consumption zones
• Large tracts of affordable land

Choosing correctly aligned zones helps reduce costs and maximizes returns.

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5. Yield Comparison

Property Type	Rental Yield	Typical Lease Duration
Data Centres	8% – 11%	10 – 20 years
Warehousing	7% – 9%	5 – 10 years
Office Spaces	5% – 7%	3 – 9 years

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6. Key Investment Hubs in India

New development zones are gaining traction:

• Chennai – for data centres due to undersea cables
• Pune & Hosur – warehousing for auto and e-commerce
• Hyderabad – growing tech and logistics base
• Lucknow & Coimbatore – emerging logistics zones

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7. Sustainability in Infrastructure Real Estate

Green infrastructure is now a must-have. Investors and tenants prefer IGBC/LEED-certified buildings that feature:

• Solar rooftop systems
• LED lighting & IoT sensors
• Rainwater harvesting
• Smart cooling systems

Green-certified assets attract better tenants and qualify for REIT inclusion.

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8. Financing Models & REIT Prospects

Entering this segment is now easier with:

• REITs for fractional ownership and regular income
• Private Equity and JV models
• Sale-leaseback deals for capital efficiency

India’s infrastructure REIT market is evolving rapidly, with data centre and logistics REITs gaining momentum.

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9. Regulatory and Land Acquisition Challenges

Challenges include:

• Zoning and land-use constraints
• Delays in utility connections
• Environmental clearances

States like Maharashtra, Tamil Nadu, and Telangana are offering fast-track approvals and single-window systems to reduce investor hurdles.

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10. Infrastructure’s Impact on Land Value

Government-led projects such as Bharatmala, DMIC, and DFC have a multiplier effect:

• Land value appreciation
• Increased job creation
• Boost to demand for warehousing/logistics assets

Investing before such developments materialize can lead to exponential gains.

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11. Strategic Takeaways for Investors

• Focus on location and connectivity
• Prioritize clear land titles and compliance
• Embrace green tech and design
• Partner with domain specialists
• Leverage REITs for diversification

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12. Outlook: What Lies Ahead

India’s digitization and consumption trends will continue to power demand for data centres and warehouses. With strong government support and evolving investment instruments, this asset class offers unmatched potential for yield and stability.

Now is the time for forward-thinking investors to reposition their portfolios towards infrastructure real estate.

Explore more insights on infrastructure and emerging real estate trends at Urvik Consulting

The Indian property tax landscape has undergone significant changes in 2025, impacting homeowners, landlords, and real estate investors alike. Whether you’re selling a property, earning rental income, or holding unsold units, it’s crucial to understand these updates to stay compliant and optimize your tax liabilities. Here’s a simplified guide to the most important changes every property owner should know.

Capital Gains Taxation Changes

Selling property in 2025 now comes with new tax rules. Properties held for 24 months or more are considered long-term assets (earlier it was 36 months). However, a major shift is that indexation benefits have been removed. Previously, indexation helped reduce your taxable gains by adjusting for inflation. Without it, your taxable profits—and tax outgo—can increase substantially.

From 2025 onwards, long-term capital gains (LTCG) are taxed at a flat 12.5%, irrespective of the purchase date. This can significantly affect those selling properties acquired many years ago. Plan your sale carefully and explore available exemptions to minimize tax impact.

Timing of Sale and Tax Deferral

If you’re considering selling property, timing is now more critical than ever. Sales completed after April 1, 2025, will have their capital gains taxed in the next financial year (2025–26). This gives sellers time to:

• Plan tax payments
• Explore reinvestment options
• Manage cash flow more effectively

A delay of just a few days could mean significant tax savings or better planning opportunities.

Annual Value Computation Adjustments

From 2025, the annual value of a property—which determines how much tax you pay—is calculated as the higher of:

• Actual rent received
• Expected rent based on market rates

For vacant properties, taxation now considers only the months the property was rented, offering relief for landlords facing longer vacancies. This ensures fairer taxation and lower tax bills during periods without tenants.

Interest Deduction Limits

Home loan interest continues to provide tax benefits, but the rules differ based on how the property is used:

• Self-occupied homes: Maximum deduction of ₹2 lakh per year on interest paid.
• Rented properties: No upper limit on the interest deduction.

This change favors landlords and can make investment properties more attractive from a tax perspective.

Standard Deduction and Arrears Taxation

Rental income remains eligible for a standard deduction of 30%, covering maintenance and repairs—even if your actual expenses are lower. This rule continues in 2025.

If you receive arrears or delayed rent, it’s taxed in the year you receive it, not the year it was due. You can still claim the 30% deduction on this delayed income, offering clarity and relief for landlords dealing with late-paying tenants.

TDS Limit on Rental Income Raised

There’s good news for smaller landlords: the threshold for Tax Deducted at Source (TDS) on rent has increased. Previously, tenants had to deduct TDS if annual rent exceeded ₹2.4 lakhs. In 2025, this limit has risen to ₹6 lakhs annually.

This means:

• Fewer landlords dealing with TDS paperwork
• Less compliance burden for small property owners
• A boost for rental activity, especially in Tier 2 and Tier 3 cities

If your annual rent is below ₹6 lakhs, tenants no longer need to deduct tax before paying you.

Set-Off and Carry Forward of Losses

If your home loan interest payments exceed your rental income or notional rent, it creates a loss under Income from House Property. In 2025:

• You can set off this loss against other income (like salary) up to ₹2 lakh annually.
• Excess losses can be carried forward for 8 years, but only to adjust future income from house property—not other income sources.

This helps investors manage tax liabilities over time, especially those with multiple properties or long-term investment strategies.

Taxation of Co-Owned Properties

For properties owned jointly:

• If ownership shares are clearly defined (e.g., 50:50), each co-owner pays tax on their share of income individually, reducing tax burden.
• If ownership shares are unclear, the income may be taxed as an Association of Persons (AOP), potentially leading to higher taxes.

Always specify ownership ratios in your sale deed or agreement to keep taxes transparent and fair.

Also Read : The RERA Revolution 2025: A New Era of Trust in Mumbai’s Real Estate

Relief for Unsold Inventory

Builders often hold unsold units post-completion. Previously, they had to pay tax on these as if they were rented out. From 2025, the annual value of unsold inventory is treated as nil for two years after a project receives its completion certificate.

This means:

• No tax liability on unsold flats or commercial units for two years
• Improved cash flow for developers
• Support for the real estate sector during slow sales periods

Exemptions and Reinvestment Limits

If you sell property and earn a capital gain, you can avoid tax by reinvesting in another home. However, new caps apply in 2025:

• You must purchase a new home within 2 years, or construct one within 3 years.
• The maximum exemption allowed is ₹10 crore. Gains beyond this limit are fully taxable.
• Selling the new property within 3 years triggers tax on the previously exempted gains.

These rules encourage genuine reinvestment rather than short-term tax planning.

Conclusion

The property tax rules in 2025 bring significant changes for anyone dealing with real estate in India. From stricter capital gains taxes to higher TDS thresholds on rental income, these updates will directly impact your returns and tax liabilities.

Whether you’re a homeowner planning to sell, an investor building rental income, or a developer managing inventory, understanding these changes can help you plan better and avoid costly surprises. With careful tax planning and smart reinvestment strategies, you can still save substantially under the new regime.