India

HDFC Capital pledges over USD 2 billion for affordable housing in India by 2025

Synopsis

Affordable housing in India is set for a significant boost as HDFC Capital Advisors pledges over USD 2 billion (INR 15,000 crore) by the end of 2025. This investment aligns with the Indian government's "Housing for All" mission, which targets 30 million affordable homes, including 10 million in urban areas. Despite strong demand, a shortage of 35 million affordable units is projected by 2030. HDFC Capital, backed by the Abu Dhabi Investment Authority, leads with a USD 3.5 billion platform for affordable and mid-income housing. This initiative, alongside investments from ICICI Prudential, Kotak Mahindra, and Deutsche Bank, aims to address the housing deficit and significantly boost India's GDP by contributing an estimated USD 2 trillion by 2030. Collaborative efforts and continued government support are crucial for achieving these ambitious goals.

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Affordable housing in India is receiving a significant boost with HDFC Capital Advisors, a leading investment firm, pledging over USD 2 billion (INR 15,000 crore) by the end of 2025. This targeted investment aims to address the shortage of affordable homes in major Indian cities.

The move aligns perfectly with the Indian government's ambitious "Housing for All" mission, which aims to provide adequate and affordable housing for all citizens. The government recently announced its support for building 3 crore (30 million) affordable homes, with 1 crore (10 million) units specifically targeted for urban areas.

Despite a perception of a booming high-end housing market in India, the demand for affordable housing remains strong. Industry estimates suggest a concerning shortage of 35 million affordable housing units in urban India by 2030. However, development of these much-needed units has lagged due to several challenges, including high land prices, limited participation from large developers, and difficulties in securing financing for affordable projects.

Backed by the Abu Dhabi Investment Authority (ADIA), HDFC Capital Advisors is a key player in the affordable housing space in India. They manage a substantial USD 3.5 billion funding platform dedicated specifically to financing affordable and mid-income housing projects across the country. Their ambitious goal is to finance the development of 1 million affordable homes by utilising innovative financing methods, fostering strong partnerships with developers, and leveraging technology to streamline processes.

Recognizing the potential of affordable housing in India, HDFC Capital Advisors isn't alone. ICICI Prudential Housing Finance has launched a dedicated affordable housing fund with a target corpus of INR 7,000 crore (USD 966 million) to invest in affordable and mid-income housing projects. Kotak Mahindra Prime Ltd. has established a INR 500 crore (USD 69 million) fund focused on affordable housing projects in tier 2 and tier 3 cities. Additionally, Deutsche Bank has committed a USD 1 billion credit line to support affordable housing finance in India.

These investments, combined with those from HDFC Capital, are expected to create a significant economic impact. Industry experts estimate the total investment required to meet the demand for affordable housing could contribute USD 2 trillion to India's GDP. Additionally, the real estate sector's contribution to GDP is projected to rise to nearly 15% by 2030, fueled by the growth in affordable housing development.

While these investments are a positive step, bridging the gap in affordable housing requires a collaborative effort. Continued government support through subsidies, tax breaks, and faster approvals for affordable housing projects is crucial. Streamlining land acquisition processes, especially for affordable housing projects, will be key to increasing development. Collaboration between government agencies and private developers through public-private partnerships can leverage resources and expertise for faster progress.

Demonstrating their commitment, HDFC Capital has already committed USD 1 billion in the past six months to affordable housing projects in major cities like Mumbai, Delhi, Bengaluru, and Hyderabad. This substantial investment is expected to create a significant economic impact. Vipul Roongta, the Managing Director & CEO of HDFC Capital Advisors, estimates that the total investment required to meet the demand for affordable housing could contribute a staggering USD 2 trillion to India's GDP. Additionally, the real estate sector's contribution to GDP is projected to rise to nearly 15% by 2030, fueled by the significant growth in affordable housing development.

The substantial investment by HDFC Capital and the government's unwavering focus on the "Housing for All" mission are positive signs for meeting the demand for affordable housing in India. By addressing financing challenges, attracting larger developers to the affordable housing segment, and implementing innovative solutions, India can bridge the gap and ensure everyone has access to safe and affordable housing.

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