Analysts estimate that the AI-led disruption could eliminate 9-12% of the IT industry revenue in the near term, directly impacting the CRE market  | Photo Credit: tadamichi

That artificial intelligence is disrupting the IT industry and will hit the commercial real estate (CRE) sector is no news. Market analysts estimate that this AI-led disruption could eliminate 9 per cent to 12 per cent of the IT industry revenue in the near term, directly impacting the CRE market. 

On the other hand, some IT companies and global capability centres (GCCs) are actively retaining fully leased premises to promote collaborative spaces and social infrastructure. The AI-led data centre boom is also spurring CRE growth.

A team from the Indian School of Business has done a survey to study the impact of AI on the CRE sector. It finds that AI is creating a unique paradox. “Artificial intelligence is simultaneously the CRE office market’s most powerful tenant and its greatest existential threat, making the understanding of this dynamic key to navigating the next decade,” it said.

The global office demand for 2025 stands at 575 million square feet, with AI firms leading the demand at about 45 per cent, while BFSI and tech firms contribute 20 per cent. Overall, software-related tenants account for 60 per cent of this global demand, the survey said.

“In India, the total office demand for 2025 is 83 million square feet. Software occupiers, back-office hubs and high-end technology firms (such as GCCs, tech, BFSI, and flex spaces) drive 70 per cent of this local demand, while AI firms currently contribute only a minor share. As offices in the country witness a 70 per cent return-to-office rate, bringing occupancy levels nearly back to pre-Covid levels,” it said in its report ‘The AI Paradox & Transforming Office Market’.

“Firms are actively retaining fully leased premises to promote collaborative spaces and social infrastructure. Furthermore, India currently hosts 2,100 GCCs, accounting for 53 per cent of the global GCC ecosystem and employing 1.9 million professionals. 

C. Shekar Reddy, former National President of the Confederation of Real Estate Developers’ Associations of India (CREDAI), observed that the AI will not have any immediate impact on the real estate sector. As AI is driving personalised services, there will be a surge in the number of people with AI skills to develop them.

Changing business model

“AI is fundamentally disrupting India’s $300 billion software and IT outsourcing industry by shifting the business model away from labour-intensive execution toward outcome-driven, high-value consulting,” the survey said.

“There are currently 47 million active software engineers worldwide, but routine coding tasks once considered irreplaceable are increasingly being automated, and routine management, testing, and deployment are shifting to AI systems,” it said.

On the other hand, millions of knowledge workers have emerged as potential software creators through AI tools, while those in the core IT sector are equipping themselves with AI-ready skills.

The team, part of an Executive Education programme at the institute, surveyed 55 CXOs across the IT, real estate, and institutional investor sectors to understand the AI-led transformation in the CRE space. The team included Garima Mishra (Sales Head at Redington Limited), Vinay Reddy (Director of CBRE), Anjana Leelarathne (Deputy Managing Director of CIC Agri Businesses, Sri Lanka), Winson C L Lay (General Manager of PUB, Singapore’s National Water Agency), and J Sundeep (Associate Director at the ISB).

Published on June 26, 2026