By Preeti Singh and Harshita Swaminathan
Indian property developer Rustomjee plans to build data centers in Mumbai, the country’s largest real estate market, as it seeks to capitalize on the rise of artificial intelligence while continuing to sell luxury homes, a top executive said.
The data centers are being developed on a 5-acre (465,000-square-meter) plot of land in Thane, a suburb of Mumbai, where the company has an “economic interest,” Chandresh Dinesh Mehta, executive director of Keystone Realtors Ltd., said in an interview.
Rustomjee, the brand of publicly traded Keystone, plans to find a strategic or financial partner for the project, he said. It currently has a housing estate in Thane through a partnership 49 percent owned by Singapore’s Keppel Land Ltd, a unit of Keppel Ltd.
“We think data centres are going to be an asset class and there is a play to be had,” Mehta said. Thane is “strategically located, where you have fibre connectivity and power availability,” he added.
India’s data center capacity has nearly doubled since 2019, attracting interest from a wide range of investors, according to a report by Avendus Capital. Mumbai alone is expected to add 40 percent of new capacity in the next five years, the report said.
Real estate investment trusts and data center companies have seen their stock values rise this year as they provide key infrastructure for large-scale AI deployments.
Keystone, which this year reached a valuation of $1 billion, got its start in the affordable housing segment in Dahisar, a far-flung suburb of Mumbai, in 1995. In 2001, its Rustomjee brand began taking over residential buildings from owners, rebuilding them and building more apartments, Mehta said.
The developer is also banking on demand for second homes, with the launch of its villa estate in Kasara, located about 100 kilometres from Mumbai. “Customers want green spaces and homes where they can spend holidays with their family and friends,” Mehta said.
Given the ageing buildings and ‘zero supply of open spaces’ in Mumbai city and its suburbs, redevelopment will remain a focus for Rustomjee, and it has no plans to invest outside the city and surrounding areas.
“There is increasing talk about redevelopment of buildings post-Covid, when people were stuck at home and realised that homes were not just places to sleep, but also to work, study, entertain and spend more time,” Mehta said.
Last year, Bollywood producer Dinesh Vijan reportedly bought three floors in Rustomjee’s new redevelopment project in the posh Pali Hill neighbourhood for more than Rs 100 crore ($12 million), according to local media. Mehta declined to comment on the transaction but said such prices were not unusual.
Any purchase of property of at least Rs 20 crore “is not a one-time transaction in Mumbai, unlike Bangalore or Chennai,” he said. “I have enough space in Mumbai.”
First publication: 04 Sep 2024 | 13:36 IST