₹2,000 Crore Fund Targets Mumbai Redevelopment

Fund to back residential development and redevelopment opportunities across MMR

MUMBAI: ICICI Prudential Asset Management Co is raising a Rs 2,000 crore residential development fund focused on Mumbai, seeking to invest in housing projects as redevelopment becomes an increasingly important source of new residential supply across established parts of the city.

The fund includes a green-shoe option of Rs 1,000 crore and has a tenure of six years. Structured as a close-ended Category II Alternative Investment Fund (AIF), it is targeting a gross internal rate of return (IRR) of around 20-25%.

Mumbai’s established markets in focus

The fund will primarily target residential projects across the Mumbai Metropolitan Region (MMR), particularly prime micro-markets where opportunities for greenfield development are constrained.

Redevelopment of existing housing societies will form an important part of the strategy, enabling the fund to participate in projects that can transform existing properties into new residential developments.

“The Mumbai property market, particularly the residential segment, continues to see demand for projects by established developers. With this fund, we are looking at development and redevelopment opportunities in the city and the requirement for upfront capital in these projects. The initial response to our fundraising has been robust,” Rohit Rathi, Principal – Real Estate Business, ICICI Prudential AMC, told ET.

Over 1,100 redevelopment agreements

Mumbai’s redevelopment pipeline has expanded considerably. Between 2020 and 2025, more than 1,100 society-level redevelopment agreements were recorded in the city, unlocking around 432 acres of land.

Such projects can require substantial funding before construction starts. Society payouts, transit accommodation, premiums and approvals are among the expenses that need to be addressed during the early stages.

Addressing the early funding gap

Banks and NBFCs generally participate at a later stage, particularly when projects become eligible for construction finance. This creates a funding requirement during the earlier part of the development cycle.

The new fund is positioned to address this requirement by providing capital for development and redevelopment opportunities before projects reach the conventional construction-finance stage.

The strategy comes as redevelopment assumes greater importance in Mumbai, where limited availability of fresh development land in established locations makes the regeneration of existing properties an important route for adding housing stock.

For developers, access to institutional capital at an earlier stage could provide greater flexibility in structuring projects. For investors, the fund offers exposure to Mumbai’s residential redevelopment market, where established locations continue to generate development opportunities.

By Sana khan
Executive Editor,
Realty Quarter
Mumbai