The government's decision to allow 100% FDI in construction is driving real estate majors to consolidate operations. The Ajay Piramal group has taken the lead by merging its two real estate ventures under a single entity. The group has merged Morarjee Realties and Piramal Holdings to form a new entity called Peninsula Land.

The group is now planning to tie up with foreign construction majors for specific projects by creating special purpose vehicles. Peninsula Land will hold the Piramal group's stake in these SPVs. Jaidev Modi, who has been heading the real estate operations of the Piramal group, will be the managing director of Peninsula Land.

Both Morarjee Realties and Piramal Holdings have been undertaking real estate projects. Morarjee Realties, which was carved out of the group textile major Morarjee Textiles, has developed two real estate projects in Mumbai.

Mr Modi said that the bigger entity was created to attract overseas participation in the real estate projects. “We are looking at large real estate projects. The merged entity will take advantage of the significant opportunities arising from the new norms for FDI in construction,” he added.

The integration of Morarjee Realties and Piramal Holdings will enable the former to develop an end-to-end chain in retail development.

Piramal Holdings, which has developed malls and commercial centres, also provides project management and consultancy. The merged entity is expected to look at large projects like information technology parks.

Piramal Holdings has already obtained the rights for developing Swan Mills at Lower Parel. Liberalised norms for FDI in construction may also force other real estate companies to integrate operations and forge joint ventures.

Market grapevine has it that companies like Bombay Dyeing are exploring the possibility of developing commercial land through strategic alliances with overseas players.