Housing finance major HDFC has announced that its Capital Affordable Real Estate Fund-2 will be combined with the first affordable housing fund, H-CARE-1, to create a $1 billion platform
These housing funds will give a significant boost to the ‘Housing for All by 2022’ objective of the Prime Minister Narendra Modi.
HDFC Chairman Deepak Parekh said the real estate investment advisory arm of mortgage lender had raised $550 million in an initial closure of its second affordable housing fund—HDFC Capital Affordable Real Estate Fund-2 (H-CARE-2).
H-CARE-2 will be combined with the first affordable housing fund, H-CARE-1, which was raised in 2016, to create a $1 billion platform, which will invest in affordable and mid-income residential projects in 15 cities across India.
The combined platform will provide both long-term equity as well as mezzanine capital to developers to build 75 million sq. ft of affordable and mid-income residential projects over the next 2-3 years. The platform will be headed by Vipul Roongta, chief executive of HDFC Capital.
“Affordable housing will not only act as a growth driver for the real estate industry in India but will also be a catalyst for GDP growth,” said Parekh.
Lack of flexible, long-term capital is one of the key challenges facing developers of affordable and mid-income housing in India, he said. “The H-CARE funds will focus on providing leading developers access to financing at attractive rates and on flexible terms,” he added.
A large chunk of the funds for the initial closure of H-CARE-2 were committed by Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund owned by the Emirate of Abu Dhabi. ADIA is also the primary investor in H-CARE-1.
“India’s housing market presents a compelling investment opportunity driven by the country’s continued economic growth and backed by supportive government initiatives,” said Khadem Al Remeithi, executive director of the real estate and infrastructure department, ADIA.
“Our investment in HDFC’s platforms aims to meet the strong demand for early-stage financing of housing projects and encourage the continued growth of the affordable and mid-income residential sector,” he said.