The joint investment platform of Housing Development Finance Corporation and Abu Dhabi Investment Authority is firming up plan to commit more than $500 million (Rs 3,175 cr) by March to affordable and mid-income housing projects across India, said HDFC chairman Deepak Parekh.
The over $1 billion investment platform with over 90% contribution from the Abu Dhabi sovereign fund has already short-listed key projects of more than a dozen developers in Mumbai, Bengaluru, Gurgaon, Kolkata, Chandigarh and Rajasthan for the deployment. These developers include Godrej Properties, Mahindra Lifespace Developers, Signature Global, Radius Developers, Rustomjee Group and Acme Group.
“Our endeavour is to participate in the huge opportunity of affordable housing, which is a sunrise segment right now and for many years to come given the housing shortage in the country. The government’s push towards ‘Housing for All by 2022’ will not only act as a growth driver for the real estate industry in India, but will also be a catalyst for GDPgrowth,” Parekh said.
The projects to be financed by the platform are expected to build over 25,000 homes with each having 300-800 sqft carpet area. The investments will be made through funds raised by HDFC Capital Advisors, a wholly owned subsidiary of India’s top mortgage lender.
In the largest ever fundraising for affordable and mid-income housing in India, HDFC Capital Advisors recently raised $550 million under the initial close of its second affordable housing fund, HDFC Capital Affordable Real Estate Fund - 2 (H-CARE-2).
This fund, combined with HDFC Capital Affordable Real Estate Fund - 1(HCARE-1) raised in 2016, creates the more than $1 billion platform to invest in affordable and mid-income residential projects in India’s top 15 cities. Both HCARE-1 and H-CARE-2 are Alternative Investment Funds with tenure of 12 years and 8 years, respectively.
The main aim of the investment platform, headed by HDFC Capital Advisors chief executive Vipul Roongta, is to provide long-term equity and mezzanine capital to marquee developers at the land and pre-approval stage and enable their entry into affordable housing. H-CARE 1 and HCARE 2 will look to partner with developers to form long-term platforms focusing on affordable and mid-income housing.
The first fund has so far committed $250 million and the second fund $100 million in nine residential projects on the outskirts of Mumbai, Pune, Bengaluru and Delhi. “We currently also have 5-6 deals in the pipeline for $200 million and they are likely to be concluded by March 2018, taking our total commitment from this platform to over half a billion. We will be investing in right location projects of credible developers with good execution track record,” Parekh said.
This platform is looking to focus on providing leading developers access to funds at attractive rates and on flexible terms that would be available right from the land acquisition stage till project completion. In addition to providing funds for these projects, HDFC Capital will also offer support in terms of product configuration, construction efficiency, design, branding and sales process that would help in bringing greater efficiency in a segment that has traditionally not been very attractive for developers.