HDFC Capital Advisors is looking to invest $550 million by March

It has identified 15 residential projects of big realtors such as Godrej, Mahindra Lifespace

In one of the largest planned fund infusions in affordable housing, HDFC Capital Advisors, the property fund management arm of HDFC, is looking to invest $550 million (Rs 35,000 million) by the end of this financial year.

“The fund has identified around 15 residential projects so far. Total commitments should aggregate $550 million by the end of March 2018,” said Deepak Parekh, chairman, HDFC.

According to experts, the fund infusion can be compared to Piramal Finance, which disburses over Rs 20 billion every month to developers in various type of financing.

The HDFC fund has identified projects of developers such as Godrej Properties, Mahindra Lifespace Developers, Signature Global, Radius Developers, Rustomjee Group, and Acme Group, among others. “The fund hopes to contribute to the building of around 25,000 units with home sizes between 300 and 800 sq. ft carpet area,” Parekh said.

HDFC Capital Advisors has a $1 billion (Rs 63 billion) platform targeted at affordable and mid-income residential projects in the country. The primary investor is a subsidiary of sovereign fund Abu Dhabi Investment Authority (ADIA).

“The objective of this fund is to address the supply side of housing by providing long-term equity and mezzanine capital to developers at the land and pre-approval stage of development of affordable housing,” Parekh said.

Parekh said while the need to increase the supply of affordable housing is recognised, the challenge is to identify projects in the right locations, ensure clean land titles and partner developers who have demonstrated a strong record on project execution.

HDFC Capital Advisors, headed by Vipul Roongta, recently achieved the initial close for HDFC Capital Affordable Real Estate Fund-2 (H-CARE 2), which has investor and fund commitment of $550 million the H-Care 2 fund plans to cover development of 75 million sq. ft across affordable and mid-income housing projects in the top 15 cities in two to three years. H-Care 1 fund was raised in 2016.

Another investor, IIFLgroup, is also looking to raise separate property funds of $500 million each for affordable housing. Shobhit Agarwal, managing director and CEO of ANB Capital Advisors, said the rising presence of established developers sewing up land deals at attractive valuations bodes well for institutional participation.

“In fact, it is a good trend as these players have established credentials and have the ability to attract equity back to the fold of this asset class.The right development partner and the optimal product in the current regulatory environment will help investor make great returns,” Agarwal said.