Insights

AI Impact Scenarios: India

How AI could reshape Indian commercial real estate over the next decade.

Artificial intelligence (AI) has the potential to influence India’s economy and, in turn, commercial real estate (CRE). Its impact on CRE, however, is unlikely to be immediate or uniform. Instead, change will occur progressively, with different sectors and asset classes responding at different speeds.

Rather than relying on a single forecast, this research explores how AI could influence India’s economy through a range of plausible macroeconomic conditions. Using a scenario-based approach, we examine the potential impacts on:

Productivity, economic growth and interest rates
Employment trends and occupier demand
Office vacancy and market performance
Strategic responses for occupiers, developers and investors
Asset quality and location decisions

Why This Matters

The future of commercial real estate won’t be determined by AI alone, but by how productivity gains translate into business growth, employment, investment decisions and demand for space. By modelling a range of plausible scenarios, this research provides occupiers, developers and investors with practical insights to help navigate an increasingly dynamic market. These dynamics are tracked in real time by our Indian AI Impact Barometer.

AI Impact Study

Our approach was to model AI’s impact through a chain of transmissions.

Key Takeaways

AI Creates Different Outcomes

AI won’t affect every sector or asset equally. Instead, it will create varying outcomes across markets, property types and investment strategies.

Office in India Is Resilient

Despite exposure to white-collar employment, office markets are still expected to grow, although outcomes vary widely across scenarios. India’s office-using workforce grows in every scenario. AI changes the pace of office hiring, not its direction. Global capability centres (GCCs) anchor much of this growth even as IT services hiring moderates, and demand is shifting toward high-quality, flexible and well-located space.

AI’s Impact Will Take Time

The effects of AI will emerge gradually as productivity gains flow through employment, investment and demand for commercial real estate. In India, gains begin to accrue later in the decade, largely through the IT services and GCC channel.

AI Scenarios

Four Possible AI Futures

The research models four internally consistent scenarios, each reflecting a different combination of AI adoption, productivity, labour-market outcomes and macroeconomic conditions.

Baseline Scenario: Incremental and Uneven AI Adoption (Highest Probability - 50%)

Productivity gains absorbed through efficiency rather than hiring
Modest uplift to GDP growth without inflationary response
Subdued near-term office demand before a later upswing

Implication: CRE demand recovers unevenly, with prolonged and gradual office adjustment.

Upside Scenario: Productivity-Led Expansion

Faster AI diffusion and monetization
Stronger GDP growth, innovation and job creation
Earlier and more durable demand for high-quality, flexible office space

Implication: AI accelerates a higher-quality, more selective CRE recovery.

Downside Scenario: AI Bust

Overinvestment followed by financial tightening
Delayed translation of productivity into demand
Substantial growth slowdown accompanied by cyclical layoffs
Prolonged office vacancy and cyclical softness across sectors

Implication: CRE stress is driven by broader financial conditions and timing, not technology failure.

Downside Scenario: AI-Driven Labour Displacement

Productivity gains realized through labor substitution
Subdued revenue growth and constrained aggregate demand
Meaningfully higher unemployment with no effective policy response
Structurally elevated office vacancy

Implication: Office demand remains impaired, with muted spillovers elsewhere.

Explore the Research Your Way

Navigate the report via the links below to explore the areas most relevant to you.

For Occupiers

How could AI change workplace strategy, portfolio planning and future space requirements?

Explore Occupier Insights

For Developers

How could AI influence development phasing, building design and asset positioning?

Explore Developer Insights

For Investors

How could AI influence asset selection, investment performance and long-term returns?

Explore Investor Insights

Impact on CRE

Key Findings for Indian Commercial Real Estate by Asset Type

Insight to Action

From Insight to Action

The scenarios are designed to support decisions, not simply describe possible futures. The practical actions below provide a starting point for occupiers, developers and investors as AI adoption evolves.

For Occupiers: Focus, Flex, Futureproof

Watch the barometer
Track utilisation signals and watch for inflection points. View the Indian AI Impact Barometer here.

Recut demand planning
Map workflows to space.

Build option value
Use flex space and evaluate break options and expansion rights.

Explore Practical Actions for Occupiers

For Developers: Phase, Provision, Position

Stage the pipeline
Approve in phases against absorption and commitment signals.

Design conversion optionality in
Build in the structure, servicing and access that permit a later change of use.

Know where the asset sits
Offer differentiated capability or price-competitive space, and price it accordingly.

Explore Practical Actions for Developers

For Investors: Reprice, Reweight, Reposition

Underwrite adaptability
Assign incremental capital expenditure, reconfiguration and upgrade headroom.

Focus on the reversion
Stress-test rents, downtime and exit liquidity.

Stage capital with options
Phase commitments, secure rights and keep dry powder.

Explore Practical Actions for Investors

The Team Behind the Report

Suvishesh Valsan

Head of Research
Mumbai, India

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Alaknanda Menon

Associate Director
India

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