Life Insurance Corporation of India, which is among the largest property owners in India, is planning to acquire land worth Rs 2,000 crore (Rs 20 billion) this year to develop commercial and residential complexes.
This will be in addition to the Rs 1,100 crore (Rs 11 billion) it spent last year for purchasing lands across the country.
The public sector insurance giant has identified Kolkata, Jaipur, Agra, Vishakhapatnam and Bangalore as possible cities where it may acquire land and develop it.
LIC had hired consultants, which had identified the growth centres in the country and based on the report, the company intends to invest in real estate. "We will evaluate the locations, which earn higher returns when we invest," a company executive said.
The insurer is next only to Indian Railways in terms of property ownership in the country and, at present, it holds 1,708 properties in the country which are estimated to be worth around Rs 20,000 crore (Rs 200 billion). In the eastern region alone, the life insurer owns 187 properties.
While a part of the real estate has been acquired by LIC in the last five decades of its existence, it also inherited a majority of the properties owned by it at the time of nationalisation in 1956. Most of the inherited real estate is in prime location, typically in central business district in most cities, including the metros.
A bulk of the commercial complex developed by LIC is being used to earn rental income, company executives said.
In Kolkata, for instance, the state-owned company is developing around 700,000 square feet of commercial area opposite the Science City, LIC zonal manager R R Dash said.
The company acquired the five acre plot from the Kolkata Municipal Corporation for over Rs 276 crore (Rs 2.76 billion) through a bidding process and is working on a 50-storied commercial building that may be the tallest building in the eastern city. It has already shortlisted around 10 design consultants for the project that is estimated to cost around Rs 400 crore (Rs 4 billion).
LIC chief engineer BK Banerjee said that during the last five years, the PSU's rental income has increased four folds and during 2007-08, in the eastern zone it stood at Rs 22 crore (RS 220 million).
"We expect that in the current fiscal the rental income would be close to Rs 30 crore (Rs 300 million) in the Kolkata region. We would like to double this in the next two years," Banerjee said.
