IFC to invest up to Rs 556 crore in Puravankara’s affordable housing arm

Puravankara on Thursday announced that International Finance Corporation (IFC) and IFC Emerging Asia Fund (EAF) will invest up to Rs 556 crore, or roughly $76 million, in residential projects of the Bangalore-based developer’s affordable housing arm, Provident.

The investments will cover four affordable housing projects.

Two projects are planned in Kochi and Bangalore with a saleable area of 4.5 million sq ft. Around 4,000 housing units will be built in the next five to seven years, while the other two projects will be identified by 2021.

IFC and EAF will invest the Rs 556 crore in special purpose vehicles set up by Puravankara, which will comprise of an investment of Rs 240 crore (around $33 million) by IFC and an equal amount by EAF, along with a loan of Rs 76 crore (approximately $10 million) from IFC.

Puravankara managing director Ashish Puravankara told FE, “We are one of the few listed developers that IFC has funded. But we are most probably the largest transaction that IFC has funded for real estate in India”.

On the rationale behind selecting Bangalore and Kochi, Puravankara said there are two ends to affordable housing. One is popularly known in western constructs and in India as social housing, which is by way of ticket size in most cities, excluding Mumbai, in the region of Rs 10-25 lakh.

“Other segment is more value for money, aspirational, high quality, and non-social housing. Because of location and price of land, they are typically in the Rs 30-60 lakh ticket size. It depends on the product and location. In Bangalore, our project is ahead of the international airport so it is not for city centre or secondary business district location,” he said.

Last is that definition of affordability changes from city to city in India. In a metro like Mumbai, affordability is Rs 60 lakh to Rs 1 crore, which would be probably defined as luxury in many other cities.

“Provident’s business model is not in social housing. What Provident has done is that it is going into locations with well designed, aspirational, high quality, value for money affordable projects with ticket size in the range of Rs 30-60 lakh,” he said.

Going ahead, due to the push from government as well as emerging market opportunities that domestic and international players are seeing, a faster growth is expected in white collar jobs in India, which will expand the market for aspirational affordable housing. This will be seen in many cities going forward like Pune, Chennai and other manufacturing as well as logistics hubs.

IFC India head, Jun Zhang said, “In a post-Covid world, the housing sector can play a key role in India. Financing affordable and green housing can protect jobs, preserve livelihoods, and address climate change while restarting economies.”