'Talks began'

Dubai Holding, which is believed to owe around $15bn to banks, is also thought to be in talks over pushing back some of its loan repayments, according to sources.

The announcement by DIC is another blow to the credibility of Dubai's finances and sovereign wealth funds in general.

It follows Dubai World, one of the emirate's three main state-owned business groups, agreeing with creditors to restructure $23.5bn of liabilities on May 20.

Last November, the same organisation's announcement that it would attempt to restructure its loans led to a massive sell-off in world stock markets.

"The point is that from the investor side this is not over," said Saud Masud, senior property analyst at Swiss bank UBS.

"Dubai Holding is not the last one. I wouldn't leave out Abu Dhabi just yet ... It's not just Dubai's but the whole of the UAE's [United Arab Emirates] exposure to the real estate sector."

'Smaller scale'

However, some analysts cautioned that Thursday's announcement by DIC was not in the same league as last year's financial crisis in the region.

Robert McKinnon, chief investment officer at ASAS Capital, said: "DIC is a little opaque.

"There's a lot of need for more capital in the system and Dubai World was not the end of the game.

"We will probably see more restructuring of Dubai entities, but on a smaller scale than Dubai World and I don't think this announcement will be a catalyst for a new market crash."