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Gulf development companies expanding outside region to deal with property slowdown

The latest announcement from the Mubadala Development Company, the investment arm of the Abu Dhabi government, indicates that it will invest about $1.8 billion in a property development project in Malaysia.

The mega project involves the construction of hotels and villas on a 1,200-hectare site in Terengganu state on the east coast of the Southeast Asian country in a joint venture with the Terengganu Investment Authority.

Mubadala will invest the amount over seven years while TIA will buy the land from the state government and inject it into the joint venture, said Shahrol Azral Ibrahim Halmi, CEO of TIA.

TIA has been set up and labelled as Malaysia's first sovereign wealth fund and is modelled on similar concepts in the Gulf with the aim of investing oil revenues for the long term in real estate projects.

Mubadala, which manages over $10 billion in assets, is also developing a $600 million city in a planned economic zone in Malaysia's southern Johor state, near Singapore.

It is working on a $5 billion residential project in Abu Dhabi in another joint venture with southeast Asia's largest developer Singapore-based CapitaLand and is teaming up with US casino operator MGM Mirage to jointly develop the £3 billion MGM Grand Abu Dhabi hotel resort.

Mubadala is also partnering with Los Angeles-based Kor Hotel Group to bring its luxury branded hotels, The Tides and Viceroy to the Middle East and has set up a joint venture with Italian luxury furniture brand Poltrona Frau Group, according to Chief Operating Officer, Waleed Al-Muhairi. The partnerships are regarded as the way forward while things remain intrenched in the Gulf, especially in Dubai.

'These kinds of relationships are crucial when the real estate market in struggling in some parts of the Gulf region. It makes sense to partner with foreign companies and to look to other markets. We expect more gulf based companies to follow this kind of pattern,' said James Colt, analyst with Crumb and Associates.

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