OREANDA-NEWS. The Asian Development Bank (ADB) has approved a $35 million equity investment in a joint venture with the Shapoorji Pallonji Group to build 20,000 affordable housing units in multiple cities across India, paving the way for more private investment in the sector.

“With rapid urbanization, the housing shortage in India is so acute that even the middle class now struggles to find appropriate dwellings,” said Juliette Leusink, Investment Specialist with ADB’s Private Sector Operations Department. “This project will help boost badly needed private sector investment in affordable homes built according to green building principles, and create up to 9,000 local jobs during the construction period.”

Affordable housing is a mass-market business in India, with a large untapped market potential across the country. However, long-term financing for the sector is not readily available due to limited risk appetite and interest from commercial banks, which are more focused on lending to the high-end and high-margin real estate market.

To overcome these constraints, ADB and other co-investors, IFC, a member of the World Bank Group, and Standard Chartered Private Equity, will make equity investments in the joint-venture unit of the Shapoorji Pallonji Group—one of India’s leading conglomerates. 

These equity injections will help launch a sizable and sustainable platform for affordable, quality homes, demonstrating the commercial viability of affordable housing projects carried out without government subsidies. 

The Shapoorji Pallonji initiative is in line with ADB’s Country Partnership Strategy for India 2013-2017, which calls for increased private sector involvement in urban development—including, among others, affordable housing. 

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.