Mattar Al Tayer, chairman of the board and executive director of the RTA, said that the first phase of the project has begun and is running to schedule, with private contractors due to start diverting utilities on Al Sufouh in the near future.
"The tram will not only be an effective solution to ease the traffic congestion but will add as a major tourist attraction in the city," Mr Al Tayer added.
Once completed, the tram service will cover 9.5 kilometres, with a budget for the project set at UAE 3.18 billion.
The new transport routes may well improve travel options for those who are looking to buy property in Dubai.
Mr Al Tayer added that the new service will serve as a viable alternative to private cars for travel in upmarket areas of the emirate.
Plans for the trams were originally put forward by the RTA in 2007.