Saturday, December 23, 2017

UAE's Adia backs $1bn India affordable housing funds

Abu Dhabi Investment Authority (Adia), one of the world's biggest sovereign wealth funds, has become a primary investor in HDFC Capital Affordable Real Estate Fund-2 (H-CARE-2), a $1-billion platform targeting mid-income residential projects in India's leading 15 cities. 

The primary objective of the platform is to provide long term, equity and mezzanine capital to marquee developers at the land and pre-approval stage for the development of affordable and mid-income housing in India, said a statement from the company. 

HDFC Capital Advisors, a real estate investment advisory arm of mortgage lender Housing Development Finance Corporation (HDFC), had raised $550 million in an initial closure of its second affordable housing fund (H-CARE-2).

It will be combined with the first affordable housing fund, H-CARE-1, which was raised in 2016, to create a $1 billion platform, HDFC said in the statement. 

The platform will invest in affordable and mid-income residential projects in 15 cities across India.

This aligns with the Centre's goal to increase overall housing supply, including 'Housing for All by 2022' initiative, remarked Deepak Parekh, the chairman of HDFC.

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 HDFC Capital CEO Vipul Roongta.

On the prime investment, Adia said India’s housing market presents a compelling investment opportunity driven by the country’s continued economic growth and backed by supportive government initiatives. 

"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," remarked Khadem Al Remeithi, the executive director of the real estate and infrastructure department at Adia.

"The latest real estate fund raising by HDFC Capital comes at a time when affordable housing has witnessed a spurt in activity after several incentives provided by the government this year, including infrastructure status," he added.

According to Parekh, these funds will play a significant role in progressing towards the ‘Housing for All by 2022’ objective of the government. 

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," he stated.

Parekh pointed out that lack of flexible, long-term capital was one of the key challenges facing developers of affordable and mid-income housing in India. 

“The H-CARE funds will focus on providing leading developers access to financing at attractive rates and on flexible terms,” he added.-TradeArabia News Service

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