Mubadala Development Co, the investment arm of the Abu Dhabi government, will invest about $1.8 billion in a property development project in Malaysia, a local newspaper has reported.

The project involves the construction of hotels and villas on a 1,200-hectare site in Terengganu state on the east coast of the Southeast Asian country, the Edge Weekly reported, citing Shahrol Azral Ibrahim Halmi, CEO of the Terengganu Investment Authority (TIA).

Mubadala will invest the amount over seven years while TIA will buy the land from the state government and inject it into the joint venture, said Shahrol.

TIA has been set up and labelled as Malaysia's first sovereign wealth fund and is modelled on similar concepts in the Gulf with the aim of investing oil revenues for the long term.

The Malaysian fund this week said it is to sell 5 billion ringgit ($1.43 billion) of bonds guaranteed by the federal government.

Shahrol of TIA said the fund aims to raise another 6 billion ringgit later this year by forward selling the oil royalty to be received by the oil-producing state over the next few years.

Mubadala, which manages over $10 billion in assets, is also developing a $600 million city in a planned economic zone in Malaysia's southern Johor state, near Singapore. – Reuters