Dubai is set to build the world’s largest airport, accommodating up to 220 million passengers per year, as the oil-rich emirate seeks to solidify its position as a global aviation hub.

The $35.7 billion (£29 billion) investment will be made in Dubai World Central (DWC), which will support the new Al Maktoum International Airport, and other facilities in the south of the city, over the next 12 years.

Documents outlining the spending plan invite banks to bid for a $3 billion loan, which the government hopes will cover the initial expansion. HSBC is acting as a financial adviser on the loan.

It's being raised by a special purpose company, which will be paid by Dubai’s Department of Finance (DOF) based on a formula linked to passenger numbers at the city’s two main airports, anonymous sources have confirmed.

The company will also raise future funding for the project including debt financing.

Costs for the entire DWC development have been estimated in excess of $32 billion.

“The proposed borrowing, especially in the context of the chunky headline number, may raise some question marks and even concerns in the minds of investors,” Chavan Bhogaita, head of market insight and strategy at National Bank of Abu Dhabi PJSC, said. “In recent years we have seen a significantly more mature, sophisticated and sustainable approach to debt financing by Dubai entities.”

Upon completion, Al Maktoum will become the world’s largest airport with an ultimate capacity exceeding 220 million passengers and 16 million tons of cargo per year. Dubai plans to move flagship carrier Emirates to the nearby World Expo 2020 site by 2025. A spokesman for the DOF declined to comment.

Dubai International Airport, the emirate's primary air hub for trans-continental traffic between America, Europe and Asia, is already the world’s busiest airport by international passengers. Traffic rose at an average compound annual growth rate of 13 per cent between 2000 and 2015 as Emirates expanded into the world’s biggest airline in terms of passenger numbers.

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The government has estimated that Dubai International and Al Maktoum will grow to serve 146 million passengers by 2025, up from 78 million in 2015. Plans for Al Maktoum’s second phase have been approved and design work is getting under way.

Dubai International Airport, now approaching maximum capacity and facing space contraints, expects to become the world’s busiest hub in the next decade, overtaking Beijing and Atlanta. The excelerated growth seen in the last few years was spurred on by the expansion of the Emirates airline, Paul Griffiths, chief executive at Dubai Airports, said earlier this year.

The facility, which has overtaken London Heathrow, expects passenger traffic to climb to 83 million this year.