Dubai announced on Sunday that work had begun on a new terminal at Al Maktoum International Airport, which the Gulf emirate's ruler said will become "the world's largest" at a cost of almost $35 billion.

"We approved the designs for the new passenger terminal at Al Maktoum International Airport, and (are) commencing construction of the building at a cost of AED 128 billion ($34.85 billion)," Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai and prime minister of the United Arab Emirates, said on X.

Once fully operational, the airport will "handle a passenger capacity of 260 million annually", the government said in a statement.

Sheikh Mohammed said it will have "the world's largest capacity" and be "five times the size of the current Dubai International Airport", which is one of the world's busiest air hubs.

According to Sheikh Ahmed bin Saeed Al Maktoum, president of the Dubai Civil Aviation Authority and CEO of flag carrier Emirates, "the first phase of the project will be ready within a period of 10 years, with a capacity to accommodate 150 million passengers annually."

Built on the city's outskirts, Al Maktoum airport has received a relatively small share of the Gulf financial hub's air traffic since 2010.

Authorities want it to replace Dubai International Airport, which has a capacity of up to 120 million passengers annually and whose city-centre location prevents expansion.