Plans for the underwater hotel project being developed by the shipbuilding arm of Dubai World have moved a step closer after it was announced that a prototype for the unit will start construction this year in Poland.

Drydocks World (DDW) said in a May 2012 statement that it had signed an agreement with a Swiss contractor to develop the World Discus Hotel, which is partly submerged under the sea.

In its latest newsletter, the Polish Information and Foreign Investment Agency (PAlilZ) said the first prototype for the Water Discus Hotel will start construction in the Baltic port city of Gdynia this year and will be financed by funds from the European Union.

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“Construction of Water Discus Hotel Prototype starts in 2013 will be the first of its kind in the world," a translation of the PAlilZ newsletter read. It added that there was also interest in taking the concept to the Maldives.

The project has received EU funding of €16m (US$21.3m) and is being developed in cooperation with the Gdansk University of Technology and specialists from private company Deep Ocean Technology.

The prototype will consist of two elements: a 20-room unit submerged around 10m underwater and a twin disc above the water, the newsletter said.

As well as providing leisure facilities, the development will also include a laboratory for ocean environment protection and research.

DDW did not provide any details on the cost of the project or a potential completion date when the project was announced in May 2012.

While DDW, part of Dubai World, is currently in the process of restructuring US$2.2bn worth of debt, the hotels venture is the latest high-profile project to move closer to completion in recent weeks.

Last week, DDW revealed the Queen Elizabeth 2 (QE2), the iconic cruise liner bought by Dubai for US$100m in 2007, is to be relaunched as a 500-room floating hotel in an unnamed Far East city.

DDW, which took over management of the 45-year old vessel from Dubai World's investment arm Istithmar, said it will undertake classification checks prior to the ship’s renovation as a five-star hotel.

The project will be managed by Singapore-based Oceanic Group, with the ship relocated from Dubai’s Port Rashid to an Asian city with "a rich maritime heritage" and "prominent waterfront".