Development Bank of Japan makes maiden realty investment in India with HDFC Capital
Bengaluru: Development Bank of Japan Inc. (DBJ), HDFC Capital Advisors Ltd. It made its first real estate investment in India by allocating capital to HDFC Capital Development Affordable Real Estate and Middle Income Fund (H-DREAM Fund) managed by.
HDFC Capital, the real estate private equity arm of HDFC Group, did not disclose the investment amount. The H-DREAM Fund has a $500 million target fund and an additional $500 million green shoe option. Current investor commitments are over $350 million.
The fund finances projects that prioritize economic and middle-income housing and aims to raise long-term capital from international and domestic institutional investors.
DBJ, wholly owned by the Japanese government, is a financial institution that provides investment and loan services to companies and projects. Its commitment to the H-DREAM Fund is important to its international investment strategy. Last year, the World Bank’s private equity arm, International Finance Corp. (IFC) has committed up to $150 million to the same fund as an anchor capital investor.
HDFC Capital is one of the country’s largest real estate private equity funds, focusing on affordable and middle-income residential real estate. Their funds combine to create a platform worth more than $4.5 billion.
“The India-Japan relationship is a reliable partnership based on strong institutional cooperation. India has seen increasing participation of Japanese investors in the financial and real estate sectors,” Deepak Parekh, non-executive chairman of HDFC Capital, said in a statement. he said. “As a state-owned entity, DBJ’s first investment in real estate in India is significant for us and strengthens investors’ long-term confidence in the country.”
Through this investment, DBJ will support India real estate marketFacing housing shortages, particularly in the affordable segment, the Bank secures investment opportunities in the high-growth market and increases the geographic diversity of the bank’s overseas real estate portfolio.
“We are delighted to be partnering with DBJ in its first year real estate Investing in India. “HDFC Capital’s focus on early-stage financing for quality, affordable and middle-income housing positions will help deepen engagement with investors committed to diversification and sustainable development,” said Vipul Roongta, CEO of HDFC Capital.
DBJ’s investment in H-DREAM Fund is being made through HDFC Capital’s offshore feeder fund structure set up under the International Financial Services Centers Authority (IFSCA) framework at Gujarat International Finance Tec-City (GIFT City). Japanese real estate investors and developers entered India much later than Americans, Canadians, West Asians and Singaporeans. The Japanese are seen as patient capital investors who invest in land and early-stage projects and are not shy about taking development risks.
Japan’s real estate bets
Investors and developers in Japan are investing heavily in India’s real estate sector due to the turnaround in office space. logistics Analysts expressed that they are convinced about the housing sectors and the country’s long-term economic growth prospects.
Post-pandemic, Sumitomo Realty & Development and Sumitomo Corp. (both Sumitomo Group companies), Mitsubishi Estate Co. Ltd, Mitsui Fudosan Co. Ltd, Mitsui OSK Lines Ltd and its subsidiary Daibiru Corp. and Marubeni Corp. Japanese companies such as have poured millions of dollars into real estate projects and land parcels, especially in Mumbai and the National Capital Region (NCR).
Japanese investors have entered India’s real estate sector through direct investments or alliances with local partners or other international investors.
