April 16, 2017 / 3:45 PM / 3 years ago

Abu Dhabi state fund considers venture with property firm Eshraq

ABU DHABI, April 16 (Reuters) - Abu Dhabi government fund Mubadala is considering forming a venture with loss-making real estate developer Eshraq Properties in the latest example of Abu Dhabi state money coming to the aid of a local company that has run into difficulties.

Mubadala and Eshraq are exploring opportunities to establish a joint real estate development venture in Abu Dhabi, they said in a statement on Sunday.

The proposed venture would develop plots of land in Abu Dhabi owned by Mubadala on Al Maryah Island and by Eshraq on Al Reem Island.

The statement did not give further details of how the venture would work, but Mubadala’s participation could be important for the finances of Eshraq, which reported a 2016 loss of 543 million dirhams ($148 million).

Abu Dhabi’s property market has been hit as low oil prices weigh on the economy. Average selling prices of apartments fell 1 percent and villa prices dropped 9 percent in the three months through March 31 compared to the last quarter of 2016, property specialists Chestertons estimated.

Abu Dhabi’s government is one of the richest in the Gulf, however, and in the last few years state institutions have stepped in to assist companies suffering losses.

In 2011, the government bailed out indebted Aldar Properties and in the same year Tabreed secured a lifeline from Mubadala to tackle its massive debt. In the last couple of weeks, Abu Dhabi’s state utility raised its stake in loss-making Abu Dhabi National Energy Co and granted the energy company land that could potentially wipe out its losses. (Reporting by Stanley Carvalho, Editing by Andrew Torchia and Louise Heavens)

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