Investment firm IFC serves as anchor limited partner for HDFC Capital's $1 billion real estate investment fund.
In a significant move towards addressing India's urban housing shortage and promoting sustainable construction practices, the HDFC Capital Development of Real Estate Affordable and Mid-Income Fund (H-DREAM) has received a commitment of up to $150 million from the International Finance Corporation (IFC).
The objective of the H-DREAM fund is to finance the development of at least 25,000 green-certified affordable and mid-income housing units in urban India, particularly in Tier-I and Tier-II cities. This comes as a response to the estimated 18 million housing unit shortfall in these cities, and the broader issue of an estimated 275 million people in India who lack access to affordable housing.
The fund aims to provide long-term capital to support sustainable housing projects that implement the EDGE (Excellence in Design for Greater Efficiencies) green building framework, aligned with global sustainability standards. By doing so, it seeks to ease the affordable housing shortage in urban India and promote green and sustainable construction practices, improving urban livability and resilience while reducing environmental footprints.
The IFC's investment in the H-DREAM Fund is designed to demonstrate the viability of innovative financing vehicles for green housing solutions. This investment is expected to mobilize up to $850 million from global and domestic institutional investors, thus scaling financing options for developers in the affordable housing segment.
HDFC Capital, the real estate private equity arm of the HDFC Group, manages the H-DREAM fund. The company aims to integrate financing, facilitate energy, water, and material efficiency, and implement innovative technology-based solutions in housing development. Vipul Roongta, managing director and CEO of HDFC Capital, stated that the company is focused on providing early-stage financing to address supply side bottlenecks for high quality affordable and mid-income housing in India.
The commitment by the IFC was first reported on the website nearly a year ago. HDFC Capital manages four SEBI-registered Category II alternative investment funds, which together create a $4.2 billion platform targeting the development of affordable and mid-income housing in India.
Imad N Fakhoury, regional director for South Asia at IFC, stated 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, reiterated that housing remains a social imperative in India and has strong multiplier effects on the economy.
In summary, the H-DREAM fund, led by HDFC Capital Advisors with IFC’s support, is a pioneering private credit fund designed to simultaneously advance affordable housing access and sustainability in India’s urban real estate, tackling both social and environmental challenges. The fund's success could set a benchmark for future urban transformation with a model for sustainable and inclusive housing finance in India’s real estate sector.
The H-DREAM fund, led by HDFC Capital, aims to finance the development of green-certified affordable and mid-income housing units in urban India, which aligns with the business of providing housing solutions. The International Finance Corporation (IFC) has committed up to $150 million towards this fund, marking a significant move in finance to promote sustainable construction practices in the business of urban housing.
