Indian luxury homebuilder Rustomjee to expand into data centres on AI boom

By Preeti Singh and Harshita Swaminathan
 

Indian property developer Rustomjee plans to build data centers in Mumbai, the nation’s largest real estate market, to ride the artificial intelligence boom while it continues to sell luxury homes, according to a top executive.

The data centers will be developed across 5 million square feet of land in Thane, a suburb of Mumbai, where the company holds an “economic interest,” Chandresh Dinesh Mehta, executive director of Keystone Realtors Ltd., said in an interview.

Rustomjee, the brand of publicly listed Keystone, plans to get a strategic or financial partner for the project, he said. It currently has a residential township in Thane through a partnership that is 49 per cent-owned by Singapore’s Keppel Land Ltd, a unit of Keppel Ltd. 

“We feel that data centers are going to be an asset class and there is play that is possible,” Mehta said. Thane is “strategically located, where you have fiber connectivity and availability of power,” he added. 

India’s data center capacity has nearly doubled since 2019, drawing interest from a wide range of investors, according to a report from Avendus Capital. Mumbai alone is expected to add 40 per cent in new capacity in the next five years, the report said. 

Real estate investment trusts and companies that have data centers have seen their share values surge this year as they provide key infrastructure for widespread AI adoption.  

Keystone, which hit a $1 billion valuation this year, began in 1995 in the affordable housing segment in Dahisar, a distant suburb of Mumbai. By 2001, its Rustomjee brand had started taking over residential buildings from owners, rebuilding them and constructing more apartments, Mehta said. 

The developer is also betting on appetite for second homes, with the launch of its villa township in Kasara, located about 100 kilometers from Mumbai. “Customers want green spaces and homes where they can spend holidays with their family and friends,” Mehta said. 

Given the aging buildings and “zero supply of open spaces” in Mumbai city and its suburbs, redevelopment will continue to be a focus area for Rustomjee, and it has no plans to invest beyond the city and its surrounding areas. 

“More buildings are discussing redevelopment post Covid, when people were stuck at home and realized homes were not only places to sleep, but 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 upscale Pali Hill neighborhood for over Rs 100 crore ($12 million), according to local media. Mehta declined to comment on the transaction, but said such pricing was not unusual. 

Any real estate purchase of at least Rs 20 crore “is not a one-off transaction in Mumbai, unlike in Bangalore or Chennai,” he said. “I have enough headroom in Mumbai.”