Waqf estates development refers to a form of development that aims to increase the productivity of waqf estates in order to create more sustainable benefits over a long period of time. The lack of funding in waqf estates development has hindered efforts to develop waqf estates productively. One of the strategies utilized by the Islamic Religious Council (MAIN) to overcome this problem is acquiring cooperation from outsiders. This cooperation is conducted by applying musyarakah funding, mudarabah and others strategy. Penang is one of the few states that are progressive in developing waqf estate productively using the musyarakah funding method. Based on this phenomenon, this study is conducted to achieve two goals. First, to identify development projects on waqf land in Penang that applies the musyarakah method. Second, to analyse the effect of the implementation of such methods in increasing productivity of the waqf estates. This study is conducted qualitatively involving data collection methods from document sources and in-depth interviews with MAINPP waqf officers. Meanwhile, the data analysis of the study is done by content analysis. The findings exposed that there are two development projects in Penang that apply musyarakah method by MAINPP namely Seetee Aisah Waqf Housing in Seberang Jaya, Penang and Khan Mohammad Waqf Housing in Penang. The analysis finds that the application of musyarakah method succeeds in increasing both the productivity of Seete Aisah waqf estate and Khan Mohammad Waqf Estate as the benefit of the development can be utilized continuously.