The International Finance Corporation ( IFC ), the private investment arm of the World Bank, is committing up to US$150 million as an anchor equity investment in an Indian fund managed by real estate private equity firm HDFC Capital Advisory.

The investment, announced on August 7, represents a strategic move to advance green affordable housing and expand access to sustainable financing for property developers in India.

HDFC Capital, a subsidiary of HDFC Bank – the largest private sector bank in India – will manage the fund, called H-Dream Fund ( HDFC Capital Development of Real Estate Affordable and Mid-Income Fund ), which has a target of US$1 billion, including a green shoe of US$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. Edge is an IFC innovation that helps property developers to build and brand green in a fast, easy, and affordable way.

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 US$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.

India, according to IFC, has an estimated 275 million people, or 22% of the population, who lack access to adequate and affordable housing. Urban housing shortfalls stand at approximately 18 million housing units in Tier-1 and Tier-2 cities.

Sustainability with financing

HDFC Capital non-executive chairman Deepak Parekh says housing remains a social imperative for India 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 building resilient communities,” he points out. “IFC continues to play a pioneering role in facilitating a greener and more inclusive India.”

Commenting on the investment, IFC regional director for South Asia Imad N Fakhoury says green affordable housing delivers a dual impact: it meets the urgent need for inclusive housing while advancing sustainability in urban development.

He adds: “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.”

The buildings sector, IFC notes, accounts for about 33% of total electricity consumption globally, with residential buildings accounting for about 24%. Greening this sector is crucial to sustainably bridge the housing gap. Though nascent, IFC estimates a potential investment opportunity of US$1.4 trillion in India’s green buildings market by 2030. Of this amount, US$1.25 trillion, or nearly 90%, will come from the residential sector.

HDFC Capital managing director and CEO Vipul Roongta highlights his company’s focus 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, water and material efficiency along with innovative technology-based solutions in housing development,” he shares. “This platform will channel 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 about US$350 million in place already.”

HDFC Capital is aligned with the Government of India’s ‘Housing for All’ initiative and is focused on financing the development of affordable and mid-income homes in a sustainable manner. It is the investment manager of four Sebi ( Securities and Exchange Board of India )-registered Category II alternative investment funds. These funds combine to create a US$4.2 billion platform, targeting the development of affordable and mid-income housing in India.