Development Bank of Japan Invests in HDFC Capital's H-DREAM Fund for Indian Housing Projects

The Development Bank of Japan (DBJ) has partnered with HDFC Capital to invest in a real estate fund, with a total targeted corpus of $1 billion, for the construction of affordable and mid-income housing projects in India.

In a statement on Thursday, HDFC Capital announced that the Development Bank of Japan Inc (DBJ) has made its first real estate investment in India, although the specific amount of the investment was not disclosed. DBJ has committed capital to the HDFC Capital Development of Real Estate Affordable and Mid-Income Fund (H-DREAM Fund), managed by HDFC Capital Advisors Ltd.

The H-DREAM Fund has a target fund corpus of $500 million with a greenshoe of $500 million, and current investor commitments already exceed $350 million. In August last year, the International Finance Corporation (IFC) had committed up to $150 million as an anchor equity investment in the H-DREAM Fund. HDFC Capital, the real estate private equity arm of the HDFC Group, is one of the largest real estate private equity funds in India, with a focus on affordable and mid-income residential real estate. The combined platform of its funds exceeds $4.5 billion, and the H-DREAM Fund specifically aims to develop green, affordable, and mid-income housing.

Deepak Parekh, Non-Executive Chairman of HDFC Capital, highlighted the significance of the partnership, stating, “The India-Japan relationship is a trusted partnership based on strong institutional cooperation. India has seen increased participation by Japanese investors in its financial and real estate sectors.” He added, “As a government-owned institution, DBJ's first investment in real estate in India is significant for us and reinforces long-term investor confidence in the country.”

Through this investment, DBJ aims to support the sustainable development of the Indian real estate market, which is currently facing a significant housing shortage. Vipul Roongta, CEO of HDFC Capital, expressed his enthusiasm, saying, “We are delighted to partner with DBJ in its first real estate investment in India. HDFC Capital's focus on early-stage financing for quality affordable and mid-income housing positions it well to deepen engagement with investors committed to diversification and sustainable development.”

DBJ's investment in the H-DREAM Fund is made through HDFC Capital's offshore feeder fund structure, established under the International Financial Services Centres Authority (IFSCA) framework at the Gujarat International Finance Tec-City (GIFT City). DBJ is a Japanese financial institution that provides integrated investment and loan services to companies and projects, playing a crucial role in supporting economic development and infrastructure projects both domestically and internationally.

This partnership between DBJ and HDFC Capital underscores the growing interest of international investors in India's real estate sector, particularly in affordable and mid-income housing, which is a critical area for economic and social development in the country.