HDFC Capital Advisors to Revolutionise Affordable Housing with $2 Billion Investment by 2025

HDFC Capital Advisors is set to make a significant investment in affordable and mid-income housing, planning to inject over $2 billion into this sector across India’s major property markets by the end of 2025. This effort aims to address supply issues and support the development of affordable housing, according to a senior executive from the company.

Largest Affordable Housing Platform

The world’s largest affordable housing platform, with the Abu Dhabi Investment Authority (ADIA) as a key investor, is working towards financing 1 million affordable homes in India through partnerships with leading developers.

“The government has announced support for building 3 crore affordable houses, including 1 crore in urban areas. This presents a $500 billion business opportunity, needing at least $100 billion in investment from public, private, and debt markets. HDFC Capital will keep investing on the supply side of this segment,” said Vipul Roongta, MD & CEO of HDFC Capital Advisors.

Targeted Investment Across Key Cities

HDFC Capital aims to invest at least $1 billion annually over the next two years in affordable and mid-income housing in the top 15 Indian cities, including Mumbai, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai, Kolkata, and Ahmedabad. The company has already committed $1 billion to such projects in the past six months, highlighting the demand for capital in this segment.

Roongta noted that despite the perception of a shift towards premium properties in India, the demand for affordable housing remains strong and is expected to persist. Industry estimates suggest an affordable housing shortage of around 35 million units in urban India by 2030.

India is entering a period of demographic growth expected to last for the next 30 years. This demographic shift is likely to lead to a consumption boom, with more than 200 million households expected to join the upper-middle class and above by 2030, compared to 70 million in 2018. This growth is anticipated to keep housing demand high.

Resilient Market Despite Rising Rates

Despite rising mortgage rates, housing demand remains at an all-time high, indicating robust market conditions. Roongta believes that affordable and mid-income housing is becoming a key driver for India’s real estate market. The real estate sector’s contribution to GDP is projected to increase to nearly 15% by 2030, up from 7% currently, due to its impact on over 250 related industries.

The investment needed to meet the demand for affordable housing could contribute around $2 trillion to the GDP, Roongta added.

HDFC Capital, established in 2016, aligns with the Indian government’s ‘Housing for All’ initiative by providing flexible, long-term capital to developers for affordable housing projects.

Economic Impact

In HDFC Capital’s portfolio, the prices for units start from Rs 12.50 lakh, with around 40% of the portfolio consisting of units priced below Rs 42 lakh. The company has invested in over 175 projects so far, helping to develop more than 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. These funds aim to increase housing supply in India.

ADIA holds a 10% stake in HDFC Capital Advisors and is the primary investor in the funds managed by HDFC Capital. This marks ADIA’s first global investment in a fund manager.

Managing a $3.5 Billion Funding Platform

The funds managed by HDFC Capital offer long-term, flexible funding throughout the lifecycle of affordable and mid-income housing projects, including early-stage funding. They also invest in technology companies within the affordable housing ecosystem, covering areas such as construction technology, fintech, and cleantech.

Commitment to Affordable Housing

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