IFC Invests $150M in H-DREAM Fund to Boost Green Affordable Housing in India

In a landmark step toward transforming India’s housing landscape, the International Finance Corporation (IFC) has announced an anchor equity investment of up to $150 million in the H-DREAM Fund (HDFC Capital Development of Real Estate Affordable and Mid-Income Fund), managed by HDFC Capital Advisors Limited, the private equity real estate arm of the HDFC Group.

The H-DREAM Fund — targeting a $1 billion corpus ($500 million initial target with a $500 million green shoe option) — will finance affordable and mid-income housing projects in India while embedding sustainability into every stage of development through the EDGE (Excellence in Design for Greater Efficiencies) Green Building Framework.

A First-of-Its-Kind Private Credit Fund

H-DREAM is among the first private credit funds globally to combine a focus on green construction with affordable housing. IFC’s commitment is expected to catalyze up to $850 million (including sponsor contributions) from institutional investors, enabling the development of at least 25,000 green housing units in Tier 1 and Tier 2 cities.

India’s housing deficit remains stark: 275 million people, or 22% of the population, lack adequate housing, with an urban shortfall of around 18 million units. This gap is particularly acute for lower- and middle-income households in growing urban centers.

Integrating Sustainability With Social Impact

The Fund will prioritize projects that meet global sustainability benchmarks, helping India transition toward low-carbon urban development. Residential buildings alone account for about 24% of global electricity use, making the greening of this sector a critical part of climate mitigation. IFC projects that by 2030, India’s green buildings market could represent a $1.4 trillion opportunity, with nearly 90% of the potential in the residential sector.

Deepak Parekh, Non-Executive Chairman of HDFC Capital, said:

“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.”

Mobilizing Global Capital and Technology

Imad N. Fakhoury, Regional Director for South Asia at IFC, emphasized the Fund’s potential to demonstrate the viability of innovative green financing vehicles:

“Green affordable housing delivers a dual impact: it meets the urgent need for inclusive housing while advancing sustainability in urban development. Our partnership with HDFC Capital aims to create jobs, improve livability, and set a benchmark for future urban transformation.”

HDFC Capital’s MD & CEO, Vipul Roongta, noted that the Fund’s model addresses supply-side bottlenecks by offering early-stage financing to smaller developers:

“We are integrating financing with energy, water, and material efficiency, alongside technology-driven housing solutions. Already, we have in-principle commitments of about $350 million from global and domestic institutions and Indian family offices.”

Economic and Social Benefits

The construction sector is a major job generator in emerging markets. By funding affordable and mid-income housing, the H-DREAM Fund will:

• Create employment in construction and related industries.

• Broaden access to housing finance, especially for underserved markets.

• Diversify the housing value chain, reducing reliance on a small number of large developers.

• Boost resilience in urban areas through sustainable design.

Carsten Mueller, IFC's Regional Industry Director for Manufacturing, Agribusiness, and Services in Asia, said:

“Our partnership builds on decades of collaboration with HDFC Group. By channeling institutional capital into underserved markets, we can strengthen and diversify India’s housing ecosystem while supporting sustainable growth.”

Ensuring Sustainability at the Core

All projects financed by the Fund will comply with IFC’s Environmental & Social Performance Standards and the EDGE Green Building Framework, ensuring resource efficiency in energy, water, and materials.

By uniting affordable housing goals with green construction standards, the H-DREAM Fund aims to demonstrate a scalable, profitable model for sustainable urban development — potentially influencing housing strategies not only in India but across other emerging markets.