With real estate prices moving southwards, several banks and financial institutions are buying their own properties and shifting from rented and leased premises.
While the country's largest financial institution, Life Insurance Corporation of India, has already bought land and built-up properties during this financial year, the country's thrid largest private lender Axis Bank is scouting for up to 5,00,000 square feet of space in areas such as Bandra-Kurla Complex, Worli and Parel.
"Property prices have fallen to attractive levels now. As we intend to expand our network, we will buy our own properties instead of taking commercial spaces on rent or lease. During the first half of this year, we have bought properties worth over Rs 511 crore (Rs 5.11 billion) across different cities," said LIC managing director Thomas Mathew T.
According to brokers, real estate prices in the country's commercial hub have fallen 30-40 per cent in the last one year. "Land at BKC is now available at just Rs 30,000 a square feet now from Rs 40,000-50,000 a year back. At Worli and Parel, properties are mostly sold on the basis of down-payment. If a buyer agrees to pay within a week or so after identifying a property, the seller offers lower rates. So far, these areas were being mostly offered on lease or rent," said Mehta, who deals in real estate in Mumbai.
"We have been planning to buy an office space of 3,50,000 - 5,00,000 square feet somewhere in BKC or Worli. As the real estate prices have come down significantly, it is the right time to buy our own property for expanding further, instead of looking for lease and rent options. We are close to finalising such a commercial space," said a senior executive at Axis Bank.
In November last year, foreign lender Standard Chartered Bank had bought about 250,000 square feet of space in BKC for Rs 750 crore (Rs 7.5 billion). Standard Chartered purchased the property from PD Developers at around Rs 30,000 a square feet, a rate which is over 30 per cent lower as compared to Rs 45,000 about a year back.
LIC intends to buy land and properties worth Rs 1,000 crore (Rs 10 billion) this financial year to accommodate its upcoming new branch offices.
The insurer, which currently has 2048 branches and 108 divisional offices, plans to open 500 new satellite offices this year.