IFC, HDFC Capital Partner to Boost Green Affordable Housing Finance in India with $1 Bn H-DREAM Fund

New Delhi, August 7, 2025: In a strategic move to advance green affordable housing and expand access to sustainable financing for property developers in India, IFC is committing up to $150 million as an anchor equity investment in H-DREAM Fund (HDFC Capital Development of Real Estate Affordable and Mid-Income Fund), managed by HDFC Capital Advisors Limited (HDFC Capital), the real estate private equity arm of the HDFC Group.

HDFC Capital, a subsidiary of HDFC Bank Limited—the largest private sector bank in India—will manage the Fund, which has a target corpus of $1 billion ($500 million with a green shoe of $500 million). The Fund will finance projects that prioritise affordable and mid-income housing while implementing the EDGE (Excellence in Design for Greater Efficiencies) green building framework, in line with global sustainability standards.

H-DREAM is among the first private credit funds globally to champion the development of green, affordable and mid-income housing. IFC’s commitment is expected to help mobilise up to $850 million (including sponsor commitment) of long-term capital from institutional investors. Additionally, the Fund will enable the development of, at least, 25,000 green, affordable and middle-income housing units.

In India, an estimated 275 million people—22 per cent of the population—lack access to adequate and affordable housing. Urban housing shortfalls stand at approximately 18 million housing units in Tier 1 and 2 cities.

“For India, housing remains a social imperative and has strong multiplier effects on the economy. The HDREAM Fund integrates sustainability with financing, which will go a long way in addressing the housing gap and building resilient communities. IFC continues to play a pioneering role in facilitating a greener and more inclusive India,” said Deepak Parekh, Non-Executive Chairman, HDFC Capital.

“Green affordable housing delivers a dual impact: it meets the urgent need for inclusive housing while advancing sustainability in urban development. IFC’s investment in H-DREAM Fund is designed to demonstrate the viability of innovative financing vehicles and mobilise long-term private capital for green housing solutions,” said Imad N Fakhoury, Regional Director, South Asia, IFC.

“By empowering developers to issue green finance instruments and scale sustainable projects, our partnership with HDFC Capital aims to create jobs, build resilience, improve liveability in cities and set a benchmark for the future of urban transformation.”

The buildings sector accounts for about 33 per cent of total electricity consumption globally with residential buildings accounting for about 24 per cent. Greening this sector is crucial to sustainably bridge the housing gap.

Though nascent, IFC estimates a potential investment opportunity of $1.4 trillion in India’s green buildings market by 2030. Of this, $1.25 trillion—nearly 90 per cent—will come from the residential sector.

“HDFC Capital is focused on providing early-stage financing to address supply-side bottlenecks for high-quality, affordable and mid-income housing in India. Our endeavour is to integrate financing, facilitate energy and water and material efficiency along with innovative technology-based solutions in housing development,” said Vipul Roongta, MD and CEO, HDFC Capital.

“We are excited to partner with IFC to promote housing and greener buildings in Tier 1 and 2 cities. This platform will channelise global and domestic capital to address the most basic social need of housing in India. We are witnessing interest from global and domestic institutions and Indian family offices with in-principle commitments of $350 million in place already.”

Carsten Mueller, Director for Manufacturing, Agri Business and Services in Asia, IFC’s Regional Industry, said, “Our partnership with HDFC Capital builds on decades of collaboration with HDFC Group to address one of India’s most pressing needs—for quality and affordable housing.”

By leveraging market-based solutions and channelling institutional capital to underserved markets, “this initiative will broaden access to housing finance, create opportunities for smaller developers and strengthen and diversify the housing value chain. With construction generating employment across emerging markets, the Fund will also support the growth of a more inclusive and sustainable housing market across India”.