(Recasts, adds background, context)
By Jason Benham
DUBAI, Jan 19 (Reuters) - Qatar's government ordered two domestic real estate companies to merge on Monday, the latest in a series of mergers and acquisitions in the Gulf Arab region where firms are struggling to cope with the global turmoil.
Barwa Real Estate, an affiliate of state-owned Qatari Diar, and Qatar Real Estate Investment Co, in which the government owns a minority stake, said they were still in the early stages of examing terms and conditions of the merger.
Consolidation in the oil-exporting region has been on the rise since late last year as the financial crisis and an oil price slump ended an economic boom, forcing firms involved in everything from property to investment to search for ways to weather the downturn.
The Qatari real estate merger would be the fourth in the world's biggest exporter of liquefied natural gas in three months, and follows a planned merger between two private investment companies in Kuwait on Sunday.
"The purpose will be to create a much bigger entity which can take the pressure due to the financial crisis," said Samer al-Jaouni, general manager of Middle East Financial Brokerage Co in Dubai. "Qatar is trying to take action before things get worse."
Al-Jaouni said that real estate prices in some areas under development in Qatar had fallen by 30 percent to 40 percent from their peak.
Earlier on Monday, the Qatari government had called on Qatar Meat & Livestock Co (Mawashi) and Al Meera Consumer Goods Co to merge, while Qatar Navigation and Qatar Shipping Co were ordered to combine in November.
"The move comes in line with the country's policy in investment to maximise higher return on investment," Barwa and Qatar Real Estate said on Monday of their merger.
The merger was also aimed at "enriching the national economy and supporting the economic development", the two firms, with combined market capitalisation of $2.5 billion, added in a statement, without elaborating.
COPING WITH DOWNTURN
Barwa, which is building a 35 billion riyal ($9.61 billion) residential development in Qatar and operates two hotels in Switzerland, aimed to finish all projects it has started, Chief Financial Officer Tamer Khedr said.
But like real estate companies across the Gulf, Barwa would not undertake any new projects, Khedr told Reuters.
He said the merger made sense because Qatar Real Estate has "a very stable, predictable cash flow", adding it was too early to say whether Barwa would need to raise new capital to complete the transaction.
Gulf economies are expected to slow down considerably this year, but Qatar's economy would still expand about 9.5 percent in real terms in 2009, the fastest in the Gulf Arab region, a Reuters poll showed in December.
Consolidation has been one way Gulf firms are coping with new economic realities.
Kuwait's First Investment Co and Gulf Investment House reached an initial merger agreement on Sunday.
The United Arab Emirates federal government, meanwhile, is combining mortgage firms Amlak and Tamweel with one of its banks to create a firm that can weather the downturn as a building boom unravels in Dubai.
Earlier this month, meanwhile, Gulf Warehousing said it was merging with Agility Qatar, a unit of Kuwait's Agility, the Gulf's biggest logistics firm.
(Additional reporting by Thomas Atkins; Editing by Rupert Winchester)