HDFC Capital to Invest $2 Billion in Affordable Housing by 2025

                HDFC Capital Advisors is making a substantial investment in affordable and mid-income housing, with plans to allocate more than $2 billion to this sector across India’s major property 
markets by the end of 2025. This move aims to address supply-side constraints, according to a senior company executive.
As the world’s largest affordable housing platform, HDFC Capital, which includes the Abu Dhabi Investment Authority (ADIA) as a key investor, is progressing towards its goal of 
financing 1 million affordable homes in India through partnerships with leading developers.

“The government recently announced support for 3 crore affordable homes, including 1 crore in urban areas. This presents a $500 billion business opportunity, requiring at least $100 
billion in investments from public and private markets, as well as debt. HDFC Capital will continue to invest in this segment's supply side,” stated Vipul Roongta, MD & CEO of HDFC 
Capital Advisors.

The fund aims to deploy at least $1 billion annually over the next two years in affordable and mid-income housing across the top 15 Indian cities, including the Mumbai region, Delhi 
NCR, Bengaluru, Pune, Hyderabad, Chennai, Kolkata, and Ahmedabad. In the last six months alone, it has committed $1 billion to affordable and mid-income housing projects, 
highlighting the significant demand for capital in this sector.

“Despite the current perception of a premiumization in India’s property markets, demand for affordable housing remains strong and is unlikely to diminish soon. Industry estimates 
suggest an affordable housing shortage of around 35 million units in urban India by 2030,” Roongta explained.

The development of affordable housing in India has lagged behind demand due to high land prices, limited participation from large developers, and financing challenges. Roongta 
noted that India's ongoing demographic dividend, expected to last for the next 30 years, will boost purchasing power and lead to a consumption boom. By 2030, over 200 million 
households are projected to be in the upper middle class and above category, up from 70 million in 2018, fueling sustained housing demand.

One indicator of this robust demand is the high demand for housing despite rising mortgage rates. Roongta believes that affordable and mid-income housing is now a key driver for 
India’s real estate sector. He predicts the sector’s GDP contribution will increase from the current 7% to nearly 15% by 2030, due to its multiplier effect on more than 250 ancillary 
industries. He estimates that meeting the demand for affordable housing will contribute around $2 trillion to the GDP.

Aligned with the Indian government’s ‘Housing for All’ goal, HDFC Capital was established in 2016 to finance affordable housing development by providing flexible, long-term capital to 
developers. In its portfolio, unit prices start from Rs 12.50 lakh, with around 40% of units priced below Rs 42 lakh. The fund has invested in over 175 projects, contributing to the 
development of over 250,000 units.

HDFC Capital manages a $3.5 billion funding platform, acting as the investment manager for HDFC Capital Affordable Real Estate Funds 1, 2, and 3. ADIA, which holds a 10% stake 
in HDFC Capital Advisors, is the primary investor in these funds. Globally, this is ADIA’s first investment in a fund manager.
HDFC Capital’s funds provide long-term, flexible financing across the lifecycle of affordable and mid-income housing projects, including early-stage funding. Additionally, the funds 
invest in technology companies involved in the affordable housing ecosystem, such as construction technology, fintech, and cleantech.

HDFC Capital aims to finance the development of one million affordable homes in India through innovative financing, partnerships, and technology, with a focus on sustainability.


Source  : The Economic Times