Deyaar, a Dubai property developer at the centre of an investigation into alleged embezzlement, said it had agreed to drop plans to develop a real estate project in India.

In November, Deyaar, Dubai's second-largest property developer by market value, said it expected to finalise a $5 billion agreement to build a township near Delhi with India's Ansal Properties and Infrastructure Ltd.

An initial agreement with Ansal to work together had been cancelled by mutual consent, Deyaar said on Wednesday in a statement on the Dubai bourse website. It did not explain why.

"Deyaar's strategic plan to participate in the attractive Indian real estate market remains on track, and discussions continue to progress with other potential partners," it said.

Earlier this month, Deyaar said it did not expect a police investigation into alleged financial irregularities by some of its employees to have an effect on profit.

Shares in Deyaar, an affiliate of Dubai Islamic Bank, were down 1.27 percent on the Dubai index. The stock is down about 20 percent this year. -Reuters