India lands biggest property deal

India's boom has pressured demand for office space

Three firms have paid 27.9bn rupees ($701m; £339m) for six acres of land in Mumbai, in what is India's biggest commercial land deal.

Reliance Industries, the Wadhwa Group and the Hiranandani Group bought the land, according to a report in the Times of India.

A shortage of high-quality office space in booming Mumbai has been driving demand and underpinning profits.

Even at these high prices, investors expect profits of more than 10%.

For its two acres, Wadhwa paid about 46,800 rupee (£569; $1,176) per square foot.

"We paid this price because of the strategic location, surrounded by garden from three sides. It is a peaceful environment," said Vijay Wadhwa, promoter of the Wadhwa Group told the Times of India.

Quietly profitable

Even after having paid these high prices, Wadhwa said it still expects to see a profit of between 10% and 15%.

Mumbai and London have the world's priciest rents for higher quality offices, with rent in Mumbai at an average of $189.51 a square foot.

This represents a 55% rise from a year earlier, a recent real estate survey suggested.

The Indian economy has been booming, seeing an annual average expansion of about 7% over the last four years, a growth rate that is expected to continue.

The multinational companies that move to India to benefit from this growth, as well as lower costs and huge English speaking workforces, also need office space.

"We already have committed clients including multinationals and diamond merchants," said Mr Wadhwa.

"We will sell the building outright once it is constructed."

The Mumbai Metropolitan Region Development Authority (MMRDA) will make good use of the cash from the sale of the land, said commissioner Ratnakar Gaikwad, adding that the bids still needed scrutinised.

"All the funds will be used for building the city's infrastructure," Mr Gaikwad said. "The Mumbai Metropolitan region needs huge funds for its development."