DUBAI- Qatar Real Estate Investments (Alaqaria) agreed to a takeover by Barwa Real Estate, the companies said on Sunday, in a deal creating Qatar's ninth-largest company with a market value of $3 billion.

Each Alaqaria share will be exchanged for 1.1 shares in Barwa, it said, adding that the deal values Alaqaria shares at 36.30 riyals per share and implies a 30.6 percent premium, a statement on the Qatari bourse website said.

Alaqaria shares were up 9.7 percent at 30.50 riyals in the wake of the deal, which was announced in early 2009.

After the merger, Alaqaria will become a subsidiary of Barwa and the market capitalization of the combined firms will reach 11.1 billion Qatari riyals ($3.05 billion), it said.

Barwa, which has properties in Paris, Switzerland and the United Kingdom, was ordered by the government in January to merge with Alaqaria.

Barwa's activities focus on retail, office, hospitality and residential property development, while Alaqaria specializes in industrial housing. The companies operations are also spread out in different geographical areas.

The managements of Barwa and Alaqaria expect that the increased scale will support future growth of the enlarged Barwa group, the statement said.

Goldman Sachs International and The First Investor are advising Barwa on the proposed merger, while J.P. Morgan advises Alaqaria.

Qatar house prices are poised to ease 15 percent in 2010 on higher supply but the construction sector would grow as 40 percent of the state budget is earmarked for infrastructure, The First Investor Asset Management said in November.

The merger is backed by the government and Qatari Diar Real Estate Investment Company (Qatari Diar), which owns 45 percent and 27 percent of the share capital of Barwa and Alaqaria respectively.

Qatari Diar said it will approve the merger and maintain at least a 45 percent equity shareholding in the new Barwa group through a contribution of assets, the statement said.

(Reporting by Tamara Walid; Editing by Thomas Atkins)