March 18 (Bloomberg) -- Mumbai is set to break its record for land prices at a sale today after the nation's financial capital doubled the minimum bid in response to surging demand.

The Mumbai Metropolitan Region Development Authority will offer plots for office space at a reserve price of 300,000 rupees a square meter ($690 a square foot), anticipating the buyer will convert the former marshland at Bandra-Kurla Complex into India's version of Canary Wharf, the financial development built in London's disused docklands.

``It will definitely exceed the reserve price as the city offers a lot of opportunities and doesn't have sufficient surplus land,'' said Anuj Puri, the India head for Jones Lang LaSalle Meghraj in Mumbai. ``BKC will emerge as what Canary Wharf is to London.''

Companies need more office space to expand in the world's fastest-growing economy after China. India, a third the size of China's $2.7 trillion economy, plans to take advantage of its location between Singapore and London to become a regional financial center and attract more global businesses.

India's government wants to lift annual growth to 10 percent by 2012, from an average 8.6 percent during the past four years.

Parsvnath Developers Ltd. and Wadhwa Builders have said they will consider bidding for the plots, which are located in north- central Mumbai, close to financial tenants including Citigroup Inc., as well as the National Stock Exchange and the National Commodity & Derivatives Exchange Ltd. Officials at DLF Ltd. and Indiabulls Real Estate Ltd. declined to comment.

Diamond Bourse

Wadhwa paid more than triple the reserve price at a sale in November. The city authority is offering two plots each for offices and houses and one for sports-related activities. The Bharat Diamond Bourse, the nation's biggest, is building 1.8 million square feet of space at Bandra-Kurla for the 30,000 visitors a day it expects. India has the world's largest diamond cutting and polishing industry.

Mumbai grew into an international trading and manufacturing center after the British received the city they called Bombay as dowry from a Portuguese Princess in 1662. The commercial heart of the British Raj was concentrated in the city's south, spread over seven islands that were gradually combined.

Now, decades-old railcars carry 6 million commuters a day in trains packing 5,000 passengers each, more than double the official capacity. Bandra-Kurla's location about 20 kilometers (12 miles) north of south Mumbai adds to its attraction as it cuts the commute time for many city residents by half.

Reliance, Enam

Reliance Industries Ltd., India's biggest company, and Enam Securities Ltd. plan to build their corporate headquarters in the area. Reliance paid double the 150,000 rupee reserve price last year for a similar site to the one being sold today.

``Government land typically has clear title so buyers don't mind paying a little extra,'' said Vivek Dahiya, a director at DTZ, based in New Delhi.

The sale also will contribute to improving the city's crumbling infrastructure. Land sales may raise 39.1 billion rupees for the Mumbai authority in the 12 months beginning April 1, helping to fund spending on roads and rail routes, it said on March 15.

Still, higher land prices may deter some companies from expanding in the city. Office rents have tripled at Bandra-Kurla in three years as more companies moved into the area.

``Rents can't exceed current levels and given the infrastructure constraints of the city it'll make business unsustainable,'' Puri said, adding that developers buying land for as much as 350,000 rupees a square meter may still be able to charge current rents.

To contact the reporters on this story: Sumit Sharma in Mumbai at sumitsharma@bloomberg.net.

Last Updated: March 17, 2008 21:08 EDT