LIC eyes real estates for higher returns

“Our revalued real-estate assets are worth about Rs 2,500 crore, whose current market price might be still far higher” added Bhardwaj.

The insurance goliath with a share of 90 per cent of life insurance business in the list of 13 players has chalked out plans to face-lift most of its branches across the country for better utilisation of its real estate. This means, in its head office at Mumbai and branches spread across the country the financial institution plans to create additional space to lend it on rental purpose.

Not only that, LIC also plans to develop its vast property by building townships and sell them to its policy holders. The insurance major has already developed some of the land plots in Mumbai, Jaipur and few other cities and has plans to expand its development activity in Mumbai and other big cities to start with.

“In some of the branches, we would like to rent the entire floor to banks, post offices and other public institutions etc”, Bhardwaj said.

“In some of our properties, we have kept the rentals unchanged for a long period of time. We plan to review the existing rent amount and also amend the agreements where maintenance cost is higher then the rent received” Bhardwaj said.

“In order to increase our presence in most places and rely more on self-owned property, we have instructed our 100 divisional offices spread across the country to purchase at least two plots of land every year. Better use of real estate means better returns, which inline will account for higher bonus for LIC holders,” he added.

This move by LIC also comes on account of sharp fall in the yield of Government Securities (G-Secs). About 60 per cent of LIC’s investments are in G-Sec and close to 10 per cent in the equities.