Dredging work has started on Dubai's multi-billion-dollar Palm Islands.

The first two phases of the ambitious project will cost more than Dh11 billion ($3 billion), Dubai Palm Developers chairman Sultan bin Sulayem said.

Funding will be handled by international banks.

Malaysia's Perkapalan Mesra i has been awarded a Dh991 million contract for dredging and land reclamation of one of the two islands, and a similar contract for the second island is imminent.

Each Palm Island consists of three islands - the breakwater, which will have 41 hotels; the 17 fronds, on which will be constructed 2,000 residential units comprising villas and condominiums; and the trunk, which will have up to five shopping centres, aquariums, multiplexes, two marinas, the region's first water theme park, and some condos.

The project is being managed on behalf of the developers by a joint venture between two US consultants, Hill International and Parsons International.

The contract with the Malaysian firm comprises Phase One and will take two years to complete. The second phase will comprise 11 main contracts extending over 18 months for the entire infrastructure.

The third phase will see construction of residential projects which will be offered for sale to UAE nationals and GCC citizens.

Each Palm Island will measure 6 km in diameter, with the protective barrier reef measuring 11 km and 200 m in width.

Each island will be at least 4 m above the high-tide mark and that the leasable space will be 33 million sq ft.

Saeed Ahmed Saeed, senior manager of engineering projects, said that 80 million cu m of raw materials will be put into place (on the first island complex) in an entirely marine-based operation.

'To minimise any disruption onshore, barges will be used to bring the rocks from quarries around the UAE coast and Iran,' he said.

The complex would be built from 2.6 million sq m of rocks, each of up to 10 tonnes, plus 17 million cu m of sand.