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IFC to invest $25M in affordable housing arm of Tata

Affordable housing

The International Finance Corporation (IFC), a part of World Bank Group, will invest $25 million ($160 crore) in the affordable housing arm of privately held real estate developer Tata Housing Development Company Ltd, the company said in a statement.

The investment will go to finance affordable housing projects for low-income households across India under Tata Value Homes, a 100 per cent subsidiary of Tata Housing.

The funding will work as longer-term capital for the developer to build about 16,800 homes over 10 years.

“Over the past few years, we have delivered over 5,000 apartments in the price range of $8,000 to $50,000 across various townships. This partnership with IFC will help us become India’s largest home provider in the value and affordable housing segment by 2018-19,” said Brotin Banerjee, chief executive officer and managing director, Tata Housing.

“IFC’s investment is the first step towards a longer-term partnership to facilitate the development of affordable housing in India and other emerging markets,” said Vipul Prakash, director, global corporate coverage, IFC.

In financial year 2014, it provided more than $22 billion across developing countries.

Affordable housing has gained a lot of attention in the last one year on the back of the Modi government’s plan to provide housing for all Indians. Housing shortage is pegged at 19 million in urban India and a major portion of it falls in economically weaker section (EWS) and low income group (LIG).

Given the government’s plan, a slew of developers have forayed into this segment. Recently, Mumbai-based developer Omkar Realtors and Developers said it is planning to foray into affordable housing space and is coming up with townships at the outskirts of Mumbai. The projects will fall in the price range of Rs 25-30 lakh. 

North-based developers Supertech and Raheja have come out with affordable projects in Gurgoan in collaboration with Haryana Urban Development Authoruty (HUDA).

Shapoorji Pallonji & Company Ltd (SPCL) also recently announced that it plans to come up with projects priced at Rs 20 lakh and above. 

Recently, one of the two co-founders of real estate dedicated investment firm cum developer Brick Eagle floated a separate firm focused on affordable housing christened Olympeo Infrastructure. The firm promises to offer first project with 1&2 BHK apartments starting from Rs 13 lakh.

As for Tata Value Homes, it is developing projects under two brands – Shubh Griha and New Haven. It is also developing a Mediterranean themed project at Santorini, near Chennai, and La Montana near Talegaon, Pune. Its projects start from Rs 12 lakh in Ahmedabad and go up to Rs 62 lakh in Pune spanning across low cost and mid-segments.

Mainstream PE investors have stayed away from affordable and low cost housing citing thin margins as the reason. However, IFC and a couple of impact investors have clinched deals in this space.



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