Abu Dhabi government-controlled Mubadala Development Company and Eshraq Properties have signed heads of terms agreement that will allow the companies to explore the possibility of establishing a joint real estate development firm in Abu Dhabi.

Eshraq’s board had given the go ahead for the deal on 12 December, the company said in a statement to Abu Dhabi Securities Exchange (ADX) where its shares are traded.

The two companies have agreed to jointly develop plots of land in the emirate owned by Mubadala on Al-Maryah Island and by Eshraq Properties on Al-Reem Island, according to a separate joint statement.

“As a strategic investment company and the Master Developer of Al-Maryah Island, we are looking for experienced partners who can support our wider strategy and bring the right credentials to these projects,” Ali Eid AlMheiri, executive director of Mubadala Real Estate and Infrastructure, said in the statement.

Established in 2006, Eshraq has a diverse portfolio of properties and development opportunities in both Abu Dhabi and Dubai, including Marina Rise on Reem Island and The Gateway in Sas Al-Nakhl. 

The company is also the founding member of the Etihad REIT, an Abu Dhabi-based investment trust which is looking to tap capital markets to raise as much as $500m by listing its shares on one of the UAE stock markets.

Mubadala, which is in the process of of launching operations as a merged entity with another Abu Dhabi investment vehicle International Petroleum Investment Company (Ipic). this month raised $1.5bn through a dual tranche bond. The combined entity, known as Mubadala Investment Company will have assets worth $125bn and will be mandated to invest on government’s behalf at home and abroad.