The building is expected to be 'bigger and bolder' than Gehry's world-famous, titanium-clad museum in Bilbao, northern Spain which was his first project for the New York-based foundation.
It is understood the head of the oil-rich Gulf emirate, crown prince Sheikh Mohammad bin Zayed al-Nahyan, also wants the project to be grander than the Guggenheim's existing museums in New York, Venice, Las Vegas and Berlin.
According to reports the 30,000m2 building will house more than (US) $10 million of newly-acquired modern and contemporary art as well as other pieces from the Guggenheim's extensive collection.
The project announcement will be a welcome distraction for Gehry from the difficulties he is facing on the King Alfred project in Hove.
Although no designs have yet emerged, there are rumours that Gehry is mulling over whether to raise the building on stilts.
Guggenheim chief Thomas Krens admitted around 130 other cities have approached him about building similar museums since the success of the Bilbao project.
However, the foundation has not had the same joy with all of its international projects.
The proposed Guggenheim scheme in Rio de Janeiro, Brazil, failed due to funding problems and Zaha Hadid's Taichung project is still not certain to go ahead.