Investment corporation IFC serves as anchor limited partner for HDFC Capital's $1-billion real estate investment fund.
Green Affordable Housing Fund Launched in India
A significant step towards addressing India's urban housing deficit has been taken with the launch of the HDFC Capital Development of Real Estate Affordable and Mid-Income Fund (H-DREAM). The fund, with a target corpus of $1 billion, aims to finance the development of green, affordable, and mid-income housing projects primarily in Tier-I and Tier-II cities.
The H-DREAM fund targets the affordable and mid-income housing segments, which are estimated to have a shortfall of around 18 million units in urban India, where approximately 22% of the population (275 million people) lacks access to adequate and affordable housing.
The International Finance Corporation (IFC), part of the World Bank Group, has committed up to $150 million as an anchor equity investor in the H-DREAM fund. IFC's investment aims to catalyze the mobilization of up to $850 million in additional long-term capital from institutional and private investors.
The fund's primary focus is on the development of at least 25,000 residential units built to the EDGE (Excellence in Design for Greater Efficiencies) green building standards, emphasizing sustainable development practices. IFC supports the fund’s integration of global sustainability standards through the EDGE certification framework, promoting green building practices in affordable housing projects.
Imad N Fakhoury, regional director for South Asia at IFC, said that green affordable housing delivers a dual impact, meeting the urgent need for inclusive housing while advancing sustainability in urban development. Deepak Parekh, non-executive chairman of HDFC Capital, stated that housing remains a social imperative and has strong multiplier effects on the economy in India.
HDFC Capital, a subsidiary of HDFC Bank, is focused on providing early-stage financing to address supply side bottlenecks for high-quality affordable and mid-income housing in India. The company integrates financing, facilitates energy, water, and material efficiency, and implements innovative technology-based solutions in housing development. HDFC Capital has four SEBI-registered Category II alternative investment funds.
The partnership between HDFC Capital and IFC aims to bridge financing gaps while promoting sustainable and inclusive urban housing development in India. IFC estimates a potential investment opportunity of $1.4 trillion in India's green buildings market by 2030, with $1.25 trillion coming from the residential sector.
| Aspect | Details | |--------------------------------|------------------------------------------------------------------------------------------------| | Fund Name | HDFC Capital Development of Real Estate Affordable and Mid-Income Fund (H-DREAM) | | Target Corpus | $1 billion (base $500 million + green-shoe option of $500 million) | | Purpose | Finance green, affordable, and mid-income housing projects in urban India | | Target Market | Affordable and mid-income housing segments in Tier-I and II cities | | Housing Shortfall Addressed | Approximately 18 million units shortfall in urban India | | Sustainability Standard | EDGE (Excellence in Design for Greater Efficiencies) green building certification | | IFC Role | Anchor equity investor with $150 million commitment, catalyzing $850 million total capital | | Fund Manager | HDFC Capital Advisors Ltd, subsidiary of HDFC Bank | | IFC Status | Limited Partner | | HDFC Capital Focus | Early-stage financing for affordable and mid-income housing, integrating financing, energy, water, and material efficiency, implementing innovative technology-based solutions in housing development | | HDFC Capital SEBI Registration | Four SEBI-registered Category II alternative investment funds |
This partnership is expected to make a significant contribution to India's green affordable housing sector, helping to address the urgent need for inclusive housing while promoting sustainability in urban development.
Investing in the H-DREAM fund, with a focus on green, affordable, and mid-income housing projects, could offer opportunities for those seeking to support sustainable urban development in India.
The IFC's investment in the H-DREAM fund, aiming to catalyze up to $850 million in additional capital, positions it as a significant player in the financing of green, affordable, and mid-income housing in India's urban sectors.
