Business & Finance Club - ABU DHABI : Mubadala Development Co., an Abu Dhabi government investment firm, and Pramerica Real Estate Investors have agreed to launch a joint-venture company that will raise capital for the emirate's real-estate projects, while sponsoring funds to invest in the region and worldwide.

Mubadala Pramerica Real Estate Investors, which will be headquartered in Abu Dhabi, will raise capital to fund and invest in real-estate projects in Abu Dhabi--the United Arab Emirates' largest emirate--and abroad, the companies said in a joint statement Wednesday.

Pramerica Real Estate Investors is the real-estate investment and advisory business of U.S.-based Prudential Financial, Inc. (PRU). It managed about $43.8 billion in gross real-estate assets as of the end of March.

The new joint venture has an initial mandate of creating investment opportunities to fund real-estate opportunities in Abu Dhabi, where a projected surge in residents means great demand for affordable residential properties while funding sources remain constrained.

Abu Dhabi expects to double its residential population over the next 20 years to over 3 million as a development plan to diversify its economy increases the need for a professional workforce.

"A shortage of bank lending provides a near-term opportunity for investors to fill the gap and provide capital to pre-let projects with secure tenancies," said Charles Pardoe, managing director of the new joint venture.

The company will also offer vehicles that invest in "in affordable residential properties for nurses, engineers, technicians, teachers and other mid-income professionals in Abu Dhabi," the statement said.

It will eventually offer products to institutional investors globally across real-estate categories, including products tailored for family office and high net worth investors from the region.

"Cross-pollination of platforms makes sense and allows both parties and their investors to benefit from respective under-penetrated markets," said Saud Masud, head of research at investment bank UBS AG in Dubai.

The venture could also help attract institutional investors to Abu Dhabi's market, where analysts have long said there are no such opportunities, though "it will probably take time to create and sell products to the institutional investors and family offices," Masud said.

Abu Dhabi, the U.A.E's capital and home to almost all the country's crude oil, has seen property prices slump up to 35% since the onset of the global financial crisis. Prices remain high, however, due to an undersupply mostly in residential properties.

The emirate's major developers are backed by the government, which owns stakes in them or provides business by contracts for major infrastructure and housing projects. Mubadala's real-estate unit is building Abu Dhabi's new central business district on an island in the emirate, among other projects in Abu Dhabi. It owns 50% of hotel operator Viceroy Hotels & Resorts.