Dubai could seek advisors to help oversee the funding for an AED 128bn (USD 35bn) project to build a new passenger terminal at Al Maktoum International Airport, a spokesperson for Dubai’s department of finance said.

Although Dubai’s recently established public debt management office (DMO) will lead the funding strategies, it “may explore the feasibility of boarding advisors if circumstances necessitate,” the spokesperson said, in response to emailed questions.

The DMO is “continuously assessing markets and the optimal financing solutions to finance the government’s strategic projects, which include the expansion of Al Maktoum International Airport”, according to the spokesperson.

Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum announced the approval of the designs to expand the airport on 28 April, which will eventually lead to a capacity of 260 million passengers a year.

The construction of the first phase is scheduled to be completed over a 10-year period, the department of finance spokesperson said.

Plans to develop Al Maktoum International Airport have been in the works for years, with the aim for it to eventually replace Dubai International Airport (DXB) as the city’s main aviation hub.

The Emirate’s growing population and a surge in airport traffic have meant DXB is close to reaching capacity, giving the expansion project a new urgency. The enlarged Al Maktoum airport will have five times the capacity of DXB, which is expected to be wound down gradually.

Market participants polled by Debtwire believed that Dubai would draw on a variety of funding sources over time, including project finance and bank debt.

Dubai Airports CEO said in an interview last week that “DXB’s robust performance and revenue base makes for a strong case for project financing.”

Still, those polled believed that there would be multiple pockets of financing that would be put in place over the coming years.

“This will be raised over a period of time, and the building will be done in phases,” said a UAE-based banker, adding that it would make sense to have an advisor overseeing the process.

“I suspect they are weighing every option, perhaps they will bring some ECAs [export credit agencies] as well,” the banker continued.

The Emirate’s deleveraging over the past few years will also put it on a stronger footing to raise the financing, the banker and a UAE-based investor said.

The banker and a sell-side analyst believed Dubai could even issue debt itself to help fund the mega-project.

“The government has paid down a lot of debt and has more capacity [to issue],” the banker said.

The expansion of Al Maktoum airport, which is located in the Southern interior of the city, is part of a push by the emirate to develop that area, which could boost demand for commercial and residential real estate.

“As we build an entire city around the airport in Dubai South, demand for housing for a million people will follow. It will host the world’s leading companies in the logistics and air transport sectors,” Sheikh Al Maktoum was quoted as saying.