HDFC Capital to Invest ₹1,500 Crore in Eldeco Platform for ₹11,000 Crore Worth of Housing Projects in Tier II & III Cities

HDFC Capital to Invest ₹1,500 Crore in Eldeco Platform for ₹11,000 Crore Worth of Housing Projects in Tier II & III Cities

Introduction

India's real estate growth story is no longer confined to megacities like Mumbai, Bengaluru, or Delhi. In a shift that reflects changing demographics, economic decentralization, and growing infrastructure, Tier II and Tier III cities are now at the forefront of the next wave of real estate development.

In a major move reinforcing this trend, HDFC Capital Advisors Ltd, the real estate private equity arm of HDFC Group, has partnered with Eldeco Group to create a development platform targeting ₹11,000 crore worth of residential projects. The investment of ₹1,500 crore will fund 18 residential projects across northern India’s emerging urban centers.

This blog dives into the implications of the deal, the cities involved, market trends, and how such investments are reshaping India's real estate future.

The Investment: A Snapshot

• Total Investment by HDFC Capital: ₹1,500 crore

• Number of Projects: 18 residential projects

• Total Development Area: Over 10 million sq. ft.

• Revenue Potential: Estimated at ₹11,000 crore

• Target Locations: Tier II & III cities in Haryana, Punjab, Himachal Pradesh, and Uttarakhand

Key Project Locations:

• Panipat & Sonipat (Haryana)

• Rudrapur & Rishikesh (Uttarakhand)

• Ludhiana (Punjab)

• Kasauli (Himachal Pradesh)

The projects will be developed by Eldeco Infrastructure & Properties Ltd (EIPL), the unlisted arm of the Eldeco Group.

Why Tier II and III Cities?

India’s smaller towns are experiencing a silent transformation. Improved connectivity, rising disposable incomes, and decentralized job creation are drawing both people and investment.

According to PropEquity, housing sales in 15 major tier-II cities surged 20% in 2023, reaching a staggering ₹1.52 lakh crore—up from ₹1.27 lakh crore the year before.

These markets are witnessing:

• Increased home ownership aspirations

• Migration from metros due to remote and hybrid work models

• Booming infrastructure investments

• Rising developer interest due to cheaper land and untapped demand

What Makes This Platform Strategic?

1. HDFC Capital’s Vision for Affordable Housing

HDFC Capital has consistently focused on affordable and mid-income housing, aligning its strategy with the Government of India’s ‘Housing for All’ initiative. By backing regional developers and creating long-term platforms, HDFC Capital addresses both the supply gap and the credit bottleneck.

Its recent tie-up with Total Environment for Bengaluru-based housing worth ₹10,000 crore is a testament to this pan-India strategy.

“We are bullish on the potential of tier-2 and tier-3 towns situated within a 300-km radius of major metropolitan areas,” — Vipul Roongta, MD & CEO, HDFC Capital

 

2. Eldeco’s Track Record

With more than 200 completed projects and 60 million sq. ft. delivered, Eldeco has a strong foothold in North India’s real estate market. The group is well-positioned to expand in cities with growing demand but limited housing supply.

 

“This investment allows us to accelerate our expansion into high-growth markets that are increasingly being connected to India’s economic centres,” — Pankaj Bajaj, CMD, Eldeco Group

 

Key Trends Fueling Tier II-III Housing Boom

1. Infrastructure Development

Massive investments in expressways, railways, and airports are shrinking travel time between tier-II cities and metros. Examples include:

• Delhi-Mumbai Expressway

• UP Defence Corridor

• New airports in Jewar (Noida) and Hisar (Haryana)

This is enhancing the commutability and appeal of smaller towns for both residential and commercial development.

2. Remote Work and Hybrid Lifestyles

Post-pandemic work models have empowered professionals to live away from metros. Cities like Dehradun, Panchkula, and Ludhiana are emerging as preferred residential destinations due to better air quality, affordability, and lifestyle.

3. Rising Real Estate Prices in Metros

Skyrocketing property prices in metros have priced out large sections of the middle class. Tier II-III cities provide a cost-effective alternative for both end-users and investors.

Projected Impact of the HDFC-Eldeco Deal

1. Supply Expansion in Underserved Markets

The collaboration is expected to bridge the housing supply gap in smaller towns where demand is growing but new inventory remains limited. This will also help reduce pressure on tier-I cities.

2. Job Creation and Economic Activity

The 18 projects will generate direct and indirect employment in construction, logistics, engineering, and allied services. Local economies in the target towns are likely to receive a significant boost.

3. Boost to Real Estate Sentiment

Such institutional investments validate the growth story of non-metro markets, encouraging other developers and investors to follow suit.

The Rise of Real Estate Platforms

Real estate platforms—where financial investors like HDFC Capital team up with developers for long-term projects—are changing the way India builds homes. These platforms:

• Ensure capital availability without over-leveraging the developer

• Encourage institutional-grade governance and transparency

• Help streamline project approvals and delivery timelines

• Enable phased, scalable development across geographies

HDFC Capital currently manages a USD 4.2 billion platform through four SEBI-registered Category II Alternative Investment Funds (AIFs) aimed at affordable housing.

Case Study: Similar Investment with Total Environment

In March 2024, HDFC Capital announced another platform—this time with Bengaluru-based Total Environment—with a commitment of ₹1,300 crore for housing projects valued at ₹10,000 crore.

This trend of platform-based funding represents a shift from traditional financing models to long-term strategic partnerships, ensuring faster execution and higher accountability.

Government Backing and Policy Support

The government’s mission to provide ‘Housing for All by 2022’—extended in various formats—has significantly improved:

• Land availability through policy reforms

• Ease of doing business in real estate

• PMAY subsidies and affordable housing interest rates

• RERA’s impact on accountability and buyer confidence

Such macro-level support makes real estate development in emerging cities more attractive than ever before.

Challenges and How the Platform Addresses Them

Challenge	Platform Solution
Unorganized real estate players	Institutional funding & professional governance
Land acquisition complexities	Local developer knowledge (Eldeco’s strength)
Buyer trust & transparency	RERA compliance and big brand involvement
Construction delays	Better funding & planning with phased developments
Weak infrastructure in smaller towns	Strategic selection near developed corridors

Looking Ahead: What to Expect in the Next 5 Years

With more platforms like this coming up, India’s housing landscape is expected to shift rapidly. Here’s what we might see:

• 10-15% YoY growth in housing sales in tier II-III cities

• More branded developers entering smaller cities

• Institutionalization of mid-size real estate firms

• Increased use of proptech, AI, and modular construction

• Enhanced focus on sustainable, green housing

Conclusion

The ₹1,500 crore investment by HDFC Capital in partnership with Eldeco is more than just a real estate deal—it's a reflection of India’s shifting urban dynamics. With the rise of smaller cities, better connectivity, and a growing aspirational middle class, the future of Indian housing lies beyond the metros.

By bringing together institutional capital and local development expertise, the HDFC-Eldeco platform is not only poised to deliver homes—but also opportunity, stability, and economic growth in India’s emerging urban heartland.

For more original, insightful coverage on Indian housing, finance, and infrastructure, visit The Economic Express.