The council plans to build at least 830 new homes in the Ancoats area of the city and neighbouring New Islington.
The plan will need to raise £1bn in the next 10 years and may need further investors to build the homes.
It is the first phase of the Manchester Life initiative and the homes will be rented out privately once built.
The plan will help the city meet its target to build tens of thousands of homes by 2027, according to Manchester City Council.
"The planned transformation of the eastern edge of the city centre is the single biggest residential investment Manchester has seen for a generation," said Sir Richard Leese, leader of Manchester City Council.
Abu Dhabi United Group is an investment company owned by Sheikh Mansour bin Zayed Nahyan and was formed to enable him to buy Manchester City Football Club in 2008.
It has also invested in other sporting assets including New York City Football Club, Melbourne City Football Club and Manchester City Women's FC.
Abu Dhabi United Group, which owns Manchester City football club, will invest in a plan by Manchester City Council to build new homes.