Explained: How Budget 2026 data centre and GCC push could reshape office & land demand

The Union Budget 2026-27 on Sunday, February 1, came with major announcements for data centers and global capability centers (GCCs), which are likely to impact India's ecosystem around commercial real estate across major hubs like Delhi-NCR, Mumbai, Bengaluru, Chennai and other cities, which may attract data centre campuses.

In the budget, Finance Minister Nirmala Sitharaman announced a tax holiday until 2047 for foreign cloud service providers using Indian data centres is aimed at positioning India as a global hub for cloud and AI infrastructure. This is expected to attract massive foreign direct investment, which is likely to draw major investment in the space.

The combination of long-term tax holidays for foreign cloud providers and safe-harbor margins for India-based data centre services meaningfully improves return visibility, which should accelerate hyperscale led land banking and BTS activity in power secure corridors, said Vivek Rathi, National Director- Research, Knight Frank India.

Data centres require large, contiguous parcels, reliable access to power, and long development runways. With tax certainty until 2047, occupiers and investors will now be willing to commit early, supporting pre-leasing and faster land monetisation, said Yateesh Wahaal, Director of Finance at M3M India.

"We expect increased demand for industrial-grade land near power corridors, logistics networks, and urban peripheries—rather than traditional office districts. Importantly, this is not short-term leasing demand; it represents long-horizon absorption," he said.

Greater tax certainty and safe-harbour clarity for GCCs should act as a catalyst for office leasing activity across India’s top hubs. Reduced transfer pricing risk and improved policy visibility are likely to encourage multinational firms to scale up higher-value functions such as engineering, analytics and R&D in India. This could translate into stronger demand for top grade offices.

"Extended safe-harbour provisions and faster advance pricing agreement processes reduce regulatory friction for global occupiers, supporting a gradual pickup in GCC-driven leasing across key IT hubs. This should aid absorption of Grade-A vacancies, though demand is likely to remain selective, favouring newer assets and well-connected micro-markets," said Rathi.

The Budget removes a key layer of ambiguity by reinforcing India's position as a long-term GCC destination.
Occupiers are now moving toward expansion-led strategies rather than consolidation, said Wahaal. "This should support steady absorption in Grade-A assets, especially well-located buildings with strong infrastructure and ESG credentials."

As data centre capacity expands alongside the evolution of GCCs into more complex, long-term operations, leasing patterns in commercial real estate are also set to evolve. Occupiers may increasingly favour longer lease tenures and higher pre-commitments to secure strategic locations and infrastructure-ready assets.

"As data centres and GCCs scale, occupiers are likely to prioritise longer tenures, higher pre-commitments, and integrated campus developments, reflecting rising capital intensity, need for operational control, and preference for scalable, future-ready platforms over fragmented standalone assets," Rathi from Knight Frank added.

"As data centres and GCCs scale up, leasing behaviour is clearly becoming more commitment-driven. We expect longer lease tenures, higher pre-commitments, and a stronger preference for integrated campus developments. These occupiers are planning for long-term continuity rather than short cycles," said Wahaal from M3M India.

Data centres lock into locations for decades, while GCCs increasingly seek campuses that combine offices, support infrastructure, and employee amenities, he added. "From a market standpoint, this marks a shift from transactional leasing to partnership-led development."

The Budget 2026 measures create a long-term incentive structure for tech and data infrastructure — materially increasing capital inflows, real estate development activity, and office space demand tied to GCCs and large data-centric facilities. The commercial real estate sector, especially tech parks, industrial land and premium offices, stands to benefit significantly.

For Grade-A offices, especially in the key IT-Tech hubs and corporate-centred cities, the sector is likely to see leasing pick up quite a bit. With GCCs getting clearer tax signals, companies are more confident about expanding, which usually means longer leases, sometimes even pre-committing to entire office campuses rather than just individual floors, said Sandeep Chhillar, Founder & Chairman, Landmark Group.

"At the same time, as data centres scale, demand for specialised land and facilities will go up, which indirectly supports the broader office space ecosystem. Overall, it feels like a virtuous cycle: tech growth, more committed leasing, and stronger demand for high-quality commercial spaces, bringing an exciting time for premium office development," he adds.