HDFC Capital to invest $2 Bn in affordable housing
Real Estate

HDFC Capital to invest $2 Bn in affordable housing

According to a top corporate official, HDFC Capital Advisors is placing a large bet on cheap and mid-income housing, intending to spend more than $2 billion in this sector by the end of 2025 across India's key real estate markets to assist in the easing of supply side limitations. The biggest affordable housing platform in the world, which has the Abu Dhabi Investment Authority (ADIA) as a major investor, is working towards its medium-term objective of funding one million affordable houses in India through platforms already in place that have been established with top developers. Vipul Roongta, MD & CEO of HDFC Capital Advisors, informed ET that the government had recently announced support for 30 million affordable houses, including 10 million homes in urban areas. According to him, this initiative represents a $500 billion business opportunity requiring investments of at least $100 billion from public, private markets, and debt sources. He stated that HDFC Capital Advisors would continue investing in the supply side of this segment. Roongta mentioned that the fund aims to deploy a minimum of $1 billion annually over the next two years in affordable and mid-income housing across India's top 15 cities, including Mumbai, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai, Kolkata, and Ahmedabad. He noted that within the last six months, the fund had already committed $1 billion to projects in this category, underscoring the substantial capital demand in this sector. Regarding the demand for affordable housing in India, Roongta stated that contrary to the prevailing perception of premiumization in property markets, the demand for affordable housing is expected to remain strong for a considerable period. Industry estimates suggest a shortage of around 35 million units in urban India by 2030. He identified challenges such as high land prices, limited involvement of large developers, and financing constraints that have hindered the sector's growth despite significant demand. Roongta highlighted India's demographic dividend, forecasting a sustained consumption boom driven by a growing upper middle class and above, projected to increase to over 200 million households by 2030 from 70 million in 2018. He emphasised that this demographic shift would continue to bolster housing demand. According to Roongta, despite increases in mortgage rates, the demand for housing remains robust, particularly in the affordable and mid-income segments, which are now emerging as key drivers for India's real estate sector. He projected that the real estate sector's contribution to GDP could rise to nearly 15% by 2030 from the current 7%, with investments in affordable housing potentially contributing around $2 trillion to the GDP. HDFC Capital manages a $3.5 billion funding platform and serves as the investment manager for HDFC Capital Affordable Real Estate Funds 1, 2, and 3, aligned with the Indian government's objective to boost housing supply. ADIA, with a 10% stake in HDFC Capital Advisors, is the primary investor in these funds. Roongta noted that, globally, ADIA's investment in HDFC Capital marks its first venture into fund management. The funds managed by HDFC Capital provide long-term, flexible financing throughout the lifecycle of affordable and mid-income housing projects, including early-stage funding. Additionally, they invest in technology companies involved in the affordable housing ecosystem, such as construction technology, fin-tech, and clean-tech. HDFC Capital's goal is to finance the development of one million affordable homes in India through innovative financing, strategic partnerships, and technology, all while prioritising sustainability.

According to a top corporate official, HDFC Capital Advisors is placing a large bet on cheap and mid-income housing, intending to spend more than $2 billion in this sector by the end of 2025 across India's key real estate markets to assist in the easing of supply side limitations. The biggest affordable housing platform in the world, which has the Abu Dhabi Investment Authority (ADIA) as a major investor, is working towards its medium-term objective of funding one million affordable houses in India through platforms already in place that have been established with top developers. Vipul Roongta, MD & CEO of HDFC Capital Advisors, informed ET that the government had recently announced support for 30 million affordable houses, including 10 million homes in urban areas. According to him, this initiative represents a $500 billion business opportunity requiring investments of at least $100 billion from public, private markets, and debt sources. He stated that HDFC Capital Advisors would continue investing in the supply side of this segment. Roongta mentioned that the fund aims to deploy a minimum of $1 billion annually over the next two years in affordable and mid-income housing across India's top 15 cities, including Mumbai, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai, Kolkata, and Ahmedabad. He noted that within the last six months, the fund had already committed $1 billion to projects in this category, underscoring the substantial capital demand in this sector. Regarding the demand for affordable housing in India, Roongta stated that contrary to the prevailing perception of premiumization in property markets, the demand for affordable housing is expected to remain strong for a considerable period. Industry estimates suggest a shortage of around 35 million units in urban India by 2030. He identified challenges such as high land prices, limited involvement of large developers, and financing constraints that have hindered the sector's growth despite significant demand. Roongta highlighted India's demographic dividend, forecasting a sustained consumption boom driven by a growing upper middle class and above, projected to increase to over 200 million households by 2030 from 70 million in 2018. He emphasised that this demographic shift would continue to bolster housing demand. According to Roongta, despite increases in mortgage rates, the demand for housing remains robust, particularly in the affordable and mid-income segments, which are now emerging as key drivers for India's real estate sector. He projected that the real estate sector's contribution to GDP could rise to nearly 15% by 2030 from the current 7%, with investments in affordable housing potentially contributing around $2 trillion to the GDP. HDFC Capital manages a $3.5 billion funding platform and serves as the investment manager for HDFC Capital Affordable Real Estate Funds 1, 2, and 3, aligned with the Indian government's objective to boost housing supply. ADIA, with a 10% stake in HDFC Capital Advisors, is the primary investor in these funds. Roongta noted that, globally, ADIA's investment in HDFC Capital marks its first venture into fund management. The funds managed by HDFC Capital provide long-term, flexible financing throughout the lifecycle of affordable and mid-income housing projects, including early-stage funding. Additionally, they invest in technology companies involved in the affordable housing ecosystem, such as construction technology, fin-tech, and clean-tech. HDFC Capital's goal is to finance the development of one million affordable homes in India through innovative financing, strategic partnerships, and technology, all while prioritising sustainability.

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