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

H-DREAM Fund is among the first private credit funds globally focused on increasing sustainable affordable and mid-income housing in urban India

New Delhi, India, 07 August, 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 prioritize 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 mobilize 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 percent of the population—lack access to adequate and affordable housing. Urban housing shortfalls stand at approximately 18 million housing units in Tier 1 and Tier 2 cities.

“For India, housing remains a social imperative and has strong multiplier effects on the economy. The H-DREAM Fund integrates sustainability with financing, which will go a long way in addressing the housing gap and build 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 mobilize long-term private capital for green housing solutions. By empowering developers to issue green finance instruments and scale sustainable projects, our partnership with HDFC Capital aims to create jobs, build resilience, improve livability in cities and set a benchmark for the future of urban transformation,” said Imad N Fakhoury, Regional Director for South Asia, IFC.

The buildings sector accounts for about 33 percent of total electricity consumption globally, with residential buildings accounting for about 24 percent. 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 percent—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 endeavor is to integrate financing, facilitate energy, water and material efficiency along with innovative technology-based solutions in housing development. We are excited to partner with IFC to promote housing and greener buildings in Tier 1 and Tier 2 cities across India. This platform will channelize global and domestic capital to address the most basic social need of housing in India and we are witnessing interest from global and domestic institutions and Indian family offices with in-principle commitments of ~$350 million in place already,” said Vipul Roongta, MD & CEO, HDFC Capital.

“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 channeling 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,” said Carsten Mueller, IFC's Regional Industry Director for Manufacturing, Agribusiness, and Services in Asia.

The Fund’s adoption of IFC’s E&S Performance Standards and EDGE Green Building Framework will ensure sustainability is at the heart of every project.