Structure and properties of hydrated clusters of halogen gas, X-2 center dot nH(2)O (X = Cl, Br, and I; n = 1-8) are presented following first principle based electronic structure theory, namely, BHHLYP density functional and second-order Moller-Plesset perturbation (MP2) methods. Several geometrical arrangements are considered as initial guess structures to look for the minimum energy equilibrium structures by applying the 6-311++G-(d,p) set of the basis function. Results on X-2-water clusters (X = Br and I) suggest that X-2 exists as a charge separated ion pair, X+delta-X-delta in the hydrated clusters, X-2 center dot nH(2)O (n >= 2). Though the optimized structures of Cl-2 center dot nH(2)O clusters look like X-2 center dot nH(2)O (X = Br and I) clusters, Cl-2 does not exist as a charge separated ion pair in the presence of solvent water molecules. The calculated interaction energy between X-2 and solvent water cluster increases from Cl-2 center dot nH(2)O to I-2 center dot nH(2)O clusters, suggesting solubility of gas-phase I-2 in water to be a maximum among these three systems. Static and dynamic polarizabilities of hydrated X-2 clusters, X-2 center dot nH(2)O are calculated and observed to vary linearly with the size (n) of these water clusters with correlation coefficient >0.999. This suggests that the polarizability of the larger size hydrated clusters can be reliably predicted. Static and dynamic polarizabilities of these hydrated clusters grow exponentially with the frequency of an external applied field for a particular size (n) of hydrated cluster.