Indian real estate firm Lodha Developers paid more than twice the asking price to win a plot of land in central Mumbai for 40.5 billon rupees ($850 million), in what is seen as the single largest land transaction in the city.
Lodha, which plans to launch a $650 million initial public offering later this year, wants to build a 105 billion rupee residential development on the 25,000 sq metre site, the company said on Tuesday.
"This is the biggest (financial) deal for a single plot so far in Mumbai," said Sanjay Dutt, chief executive at property services firm Jones Lang LaSalle Meghraj.
The Mumbai Metropolitan Region Development Authority had set a minimum price of 19.8 billion rupees for the plot.
And the previous record for an 18 billion rupee deal to build a commercial complex in neighbouring Navi Mumbai was set in April 2008.
"We think this is an aggressive price based on very optimistic demand forecast," Dutt said.
Land auctions in Mumbai, India's financial capital, attract huge interest from developers desperate for stock in the land-starved city, but skyrocketing prices have meant most recent auctions by the development authority have been unsuccessful.
Property prices in major Indian cities such as Mumbai and Delhi have nearly doubled in the past year, as home and office buyers return and mortgage rates remain in single-digits. Mumbai is rated among the most expensive office locations in the world.
"With the upcoming monorail and metro rail both converging here and the new freeway being built along the harbour also joining, this site will be the most well-connected in the city," said Abhisheck Lodha, managing director, Lodha Developers.
The Mumbai-based developer focuses on high-end residential apartments in and around India's financial capital.