A massive fire broke out at The Address Hotel, not far from the Burj Khalifa Tower, around which thousands of people have gathered to watch the New Year fireworks.
Firefighting teams were dispatched. Officials said authorities are currently on site to deal with the incident.
The Dubai Civil Defence said they have it under control, an official said.
A civil defence spokesperson said: "three teams are battling the flames, and they almost have it under control". He added that the hotel has been evacuated.
Other areas further from the fire are unaffected and people are still lined up for the event. All gazes were averted to the burning hotel.
Eyewitness said that people are being evacuated out of Dubai Mall and the hotel.
Debris can be seen falling out from the buildings while people around are watching helplessly.
"I hope everyone is safe. I can't believe this is happening at this time," said one eye witness.
"This is horrific. I hope everyone is safe. I can see things falling out of the building," said another witness.
Eye-witnesses said the small fire started small behind the Address Hotel Downtown, on a part facing the Burj Khalifa tower.
Twitter post showed the initial stage of the fire, starting on the lower part of the sailboat-shaped building.
But the fire raged and quickly spread to other parts of the hotel, fanned by strong winds coming in from the north.
A staff from restaurant in the hotel said they were asked to evacuate from around 9.45pm.
Before long, flaming debris were seen coming down in Souq Al Bahar area, a mixed-use complex of retail and residential units which is had also been evacuated.
The Address Hotel Downtown, a stand-alone hotel, was reportedly gutted completely.
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