Gulf Arabs, captivated by the beauty of Venice, are investing millions of dollars to create a replica of the romantic Italian city in Bahrain.

Investors, mainly from Saudi Arabia, have launched a project to build an artificial island in the Bahrain archipelago at a cost of BD15 million ($40 million), replete with Venice's canals and gondolas.

Construction will take about two years and is expected to start later this year.

Bahrain hopes to cash in on its relaxed social environment to lure foreign tourists to its warm climate and sandy beaches.

"Gulf Arabs love Venice, so they decided to build a similar, floating island. It will be designed exactly like the Italian city of Venice, but with chalets," said Saud Kanoo, the chairman of privately owned holding firm Ossis.

Ossis are the developers and will hold a stake in the "Floating Island".

In January, Bahrain contracted a French group to build 325 chalets on the 28,000-sq m Floating Island, as part of the country's drive to boost tourism.

Kanoo said the Floating Island would cater mainly for families and foreign visitors.

"There are many hotels in Bahrain, enough to accommodate other classes of tourists, so we decided to build the island to attract more foreigners," Kanoo said.