The ruler of the Gulf desert city state, Sheikh Mohammed bin Rashid al-Maktoum, announced the plan for a "new city within Dubai," according to an official statement, naming it after himself.
No cost was stated for "Mohammed bin Rashid City," to be carried out by his Dubai Holding and the publicly-listed Emaar Properties, which developed many of Dubai's prestigious projects, including Burj Khalifa, the world's tallest tower.
The plan also features new residential areas, although the emirate continues to have a surplus of units built during a five-year bubble which burst in 2009.
The "Mall of the World" will have a capacity of 80 million visitors a year to become the "largest in the world," said the statement, while its park will be "30 percent bigger than Hyde Park of London."
The mall will be connected to a family entertainment centre to be developed in cooperation with Universal Studios International that will be the largest in the region, aiming to attract six million visitors a year.
The emirate already has countless malls and hotels, including the Dubai Mall, touted as the world's largest shopping, leisure and entertainment destination, with 62 million visitors this year.
"The current facilities available in Dubai need to be scaled up in line with the future ambitions for the city," Sheikh Mohammed said in the statement.
Dubai's tourism is growing by 13 percent a year, according to the statement, with hotel occupancy hitting 82 percent in 2011 while hotel revenues grew 22 percent last year, exceeding 16 billion dirhams ($4.4 billion).
The emirate rocked global financial markets in autumn 2009 over its debt crisis, but Dubai has restructured the mountain of debt owed by its corporations, and its economy has returned to growth after contracting in 2009.