Dubai government-owned property developer Nakheel is speaking with a small group of banks to borrow AED5bn ($1.4 billion) to fund construction of some of its projects.

The talks are at an initial stage, UK’s Reuters news agency reported, citing unnamed sources familiar with the matter. If the deal is successful, it will be the first sizeable fund raising for the developer since it almost collapsed following the 2008 property meltdown in the emirate.

Nakheel has asked banks to provide it with prospective pricing if it borrowed for eight- to 10-year terms. Nakheel did not comment on the talks.

Property developers, contractors and many other corporations in the GCC are trying to tap debt markets ahead of an expected rise in cost of borrowing on the back of US interest rate hike and liquidity pressure in the banking system.

Developers such as Nakheel were hit hard when property market came to a grinding halt at the end of 2008 and real estate values more than halved in some parts of Dubai and Abu Dhabi. Following the crisis, Nakheel was forced to restructure almost $16bn of debt with the lenders and trade creditors.

Real estate market made a recovery close to pre-crisis levels and values in Dubai were among the fastest-rising in the world in the 18 months to June 2014. However the market has soften again, making it more pressing for developers such as Nakheel to secure funding.

Nakheel, which is trying to add to its already sizeable portfolio of properties yielding recurring income, has already paid its debts four years ahead of the schedule.

In response to a question from Reuters, a spokeswoman for Nakheel said the company already had sufficient capital to cover the repayment of its AED4.4bn sukuk maturing in August 2016.

The company is planning to develop 10 new hotels across Dubai and on Monday signed a joint venture agreement with Spain’s RIU Hotels to open a hotel at Nakheel’s Deira Islands master development. The mixed-use development will add 40 kilometres to Dubai’s coastline.