The property unit of Dubai-based Al-Futtaim Group said it was adopting a cautious approach in its expansion because the Gulf could be affected by a global downturn.

Emad Nimeh, a development director at Al-Futtaim Group Real Estate which has multi-billion dollar projects in Dubai and Cairo, said it was unclear how the local markets would be impacted, but would evaluate things on a project by project basis.

"The prudent thing is to monitor... to say we are isolated is wrong ... we are connected and it is going to affect all the GCC, like it has Europe, the US and Asia, but nobody knows how," he told Reuters in an interview.

Al-Futtaim raised $500 million earlier this year from investors for a fund to develop real estate projects in the Middle East and North Africa, including the $9 billion Festival City, a residential and commercial project that Al-Futtaim is developing in Cairo.

Nimeh said the company, which predominantly self-finances its schemes, had not faced any funding issues and was still looking for opportunities in North Africa and India.

"We continue to explore opportunities ... it's not the right time, but if an opportunity presents itself in terms of landback we will do it," he said.

Unlike other many other Dubai developers Al-Futtaim does not sell and focuses on the rental and lease market.

Nimeh said if scheduled deliveries enter the Dubai market next year, rental prices, which are among the highest in the world, could stabilise.

"I don't see how the rental market can go much higher," he said."If delivery of projects under construction happens next year, it will steady."    

In Dubai, Al-Futtaim, part of a group with businesses ranging from autos to financial services, is building a 1,300 acre (526 hectare) Festival City development, with shops, offices, apartments and hotels, at a cost of $12 billion. It launched three new phases on Monday without giving project costs. -Reuters