IFC, HDFC Capital partner for green affordable housing finance in India with $1 billion fund
The International Finance Corporation (IFC) has entered into an agreement with HDFC Capital Advisors to anchor a $1 billion (about Rs 8,770 crore) real estate fund focused on green affordable housing in India.
IFC, a member of the World Bank Group, will invest up to $150 million (about Rs 1,320 crore), in the HDFC Capital Development of Real Estate Affordable and Mid-Income Fund (H-DREAM Fund), which will be managed by HDFC Capital, the real estate private equity arm of the HDFC Group.
The fund will finance projects that prioritise affordable and mid-income housing, while implementing the EDGE (Excellence in Design for Greater Efficiencies) green building framework, in line with global sustainability standards.'For India, housing remains a social imperative and has strong multiplier effects on the economy. The H-DREAM Fund integrates sustainability with financing, which will go a long way in addressing the housing gap and build resilient communities. IFC continues to play a pioneering role in facilitating a greener and more inclusive India,' said Deepak Parekh, non-executive chairman, HDFC Capital.IFC's commitment is expected to help mobilise up to $850 million, including sponsor commitment, of long-term capital from institutional investors. Additionally, the fund will enable the development of at least 25,000 green, affordable and middle-income housing units.
'Green affordable housing delivers a dual impact as it meets the urgent need for inclusive housing while advancing sustainability in urban development. IFC's investment in H-DREAM Fund is designed to demonstrate the viability of innovative financing vehicles and mobilise long-term private capital for green housing solutions,' said Imad N Fakhoury, regional director for South Asia, IFC.According to him, the IFC-HDFC Capital partnership aims to help developers scale up green projects, create jobs, boost urban resilience and set a benchmark for sustainable urban growth.'HDFC Capital is focused on providing early-stage financing to address supply-side bottlenecks for high quality affordable and mid-income housing in India,' said Vipul Roongta, managing director and CEO, HDFC Capital. 'Our endeavour is to integrate financing, facilitate energy, water and material efficiency along with innovative technology-based solutions in housing development. This platform will channelise global and domestic capital to address the most basic social need of housing in India.'The fund has witnessed interest from global and domestic institutions and Indian family offices, with in-principle commitments of $350 million already in place, according to him.This is the largest sustainability-led affordable housing fund in India—and among the largest in the world. It also marks the biggest supply-side financing initiative in this segment.
'By leveraging market-based solutions and channelling institutional capital to underserved markets, this initiative will broaden access to housing finance, create opportunities for smaller developers, and strengthen and diversify the housing value chain,' said Carsten Mueller, IFC's regional industry director for manufacturing, agribusiness and services in Asia. The buildings sector accounts for about 33% of total electricity consumption globally, with the share of residential buildings at about 24%. Greening this sector is crucial to sustainably bridge the housing gap.Though nascent, IFC estimates a potential investment opportunity of $1.4 trillion in India's green buildings market by 2030. Of this, $1.25 trillion or nearly 90% will come from the residential sector.In India, an estimated 275 million people, or 22% population, lack access to adequate and affordable housing. Urban housing shortfall stands at about 18 million housing units in tier-1 and tier-2 cities.
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