Josef Kleindienst's Germany is flat and about half the size of his Austria. His Sweden borders the Netherlands. And when it comes to Switzerland, he says that after the recent ban on building minarets there, he has even given some thought to calling it something else.

Kleindienst, 46, has bought half of Europe. But this Europe happens to be made up of sandy islands lying four kilometers (2.5 miles) off the coast of Dubai. Each island is named after a country.

Kleindiest bought this property before the crisis struck Dubai. Now he's stuck with six empty islands. Wearing a blue suit, he strolls back and forth over one patch of sand pointing out what is what. To the south is France; to the west is England. And way over here on the edge -- which would seem to be somewhere around the North Pole in geographical terms -- is the only island with any palm trees on it, which also has a villa. "The ruler of Dubai gave this one to his wife as a present for Valentine's Day," Kleindienst says.

Two years ago, Kleindienst got hold of the last of the 300 islands that make up his "World." But, since then, not much has happened on this artificial atlas-cum-archipelago off Dubai. Kleindienst wants to change that. And that is making an impression in a city that has recently been scrapping projects rather than announcing new ones. Who is Kleindienst? And what does he want to do on "The World," one of the zaniest projects yet undertaken by Nakheel, the heavily indebted real estate development firm that hurled Dubai into its current debt crisis ?

The project has drawn reporters from a number of media companies: the Financial Times, news agency Dow Jones and the Arab news broadcasters Al Jazeera and Al Arabiya. All of them have taken the boat out to the islands and walked the red carpet into the beer tent, where they can gorge themselves on pretzels, spätzle noodles and apricot strudel. Kleindienst, you see, is Austrian.

Energy-Neutral 'Sisi' Hotel

The first projects are supposed to get started in "Germany." Kleindiest plans to build 20 villas on the island, which will range in price between €750,000 and just under €3 million ($1.1-4.3 million) each. He's already sold three of them, one to a Swedish investor and two to Germans. Construction is scheduled to begin early next year. The blueprints come from the Spanish architectural firm A-Cero, which has built homes for the football stars Zinedine Zidane and Ronaldo Häuser.

Then, in the second phase, a floating hotel named Sylt -- after the upscale German resort island in the North Sea -- will be built before construction gets started on the rest of the "continent." There will be a "Nightlife District" on the island for the Netherlands, a "Sisi" hotel on the Austrian one, named for the late Empress of Austria, an air-conditioned street on the Swedish one. In total, there will be 75 vacation homes, six hotels and six floating palaces. All of them will use solar energy and be energy neutral thanks to the technical expertise of Germany's Fraunhofer Society, one of Europe's largest institutes for applied research.

"Some of you might find it interesting that we are starting this project at this point in time," Kleindienst says. "But, we believe in Dubai's fundamentals." Each week, he notes, 240 flights arrive in Dubai from Europe. There's guaranteed sun in the winter. And since Dubai is only three hours ahead of Europe, jetlag is not much of an issue for Europeans. Next year, Germans will buy a total of 60,000 vacation homes around the world. Today, Germans already own 200,000 vacation homes in Florida alone.

A Buyer's Market

Kleindienst might be right. Still, since the outbreak of the real estate crisis, whole cities full of newly built vacation homes in Spain have stood empty. And, in Dubai, real estate brokers are so desperate to sell luxury villas that they'll let people live like kings at a drastically reduced price.

Kleindeinst has a ready response to these points. In 2003, he came to Dubai himself as a broker. In 2006, he sold some villas on the island Palm Jumeirah for €500,000 a piece. Today, he's selling them for no less than three times that amount. Granted, on the eve of the crisis, in the crazy summer of 2008, they would have been selling at a brisk pace for €3 million, but real estate prices have plunged by half since then.

Compared to 2006 prices, though, things are still rather reasonable. That is, of course, if Dubai doesn't completely crash and see expatriates fleeing it in droves. It's the kind of scene that has recently even been imagined in a dismal first-person shooter video game -- Spec Ops: The Line -- released in Los Angeles last week, which portrays Dubai as a post-apocalyptic boomtoom with the ruins of its high-rises beset by cataclysmic sandstrorms.

Still, Kleindienst rhapsodizes over golf in the winter, rugby tournaments in Dubai and Formula One races in Abu Dhabi as a seaplane, a Cessna Caravan, lands on the strait dividing the islands representing England and France and taxis with spinning propeller over to the Germany island. "May we now invite you to our little trip around the world?" asks Kleindienst's assistant. Per, the Norwegian pilot dressed in shorts and a T-shirt, lowers the stairway door leading into the plane, and the first group of travelers pulls up their pant legs and wades over to the Cessna.

A Flag for Each Island

Kleindeinst put down an almost €50 million deposit for the islands representing Germany, Austria, Switzerland, the Netherlands, Sweden and St. Petersburg. To help passengers on the plane recognize which island is which, each of them has been marked with a different flag. It's a surreal sight from above: six white strips of sand on an atlas in the sea, each with a huge flag lying in their centers.

Kleindienst says that the Germany island is the first one that has been paid off. Whoever buys a plot also purchases a title in Dubai's real estate register.

Kliendienst also says that he has raked in a good €200 million since 2003 and that he was "doubly lucky" because he also sold his portfolio immediately before the crisis struck. These funds will now allow him to pay for his plans for "The World" with his own money until 2012. After that, he says he'll have to get outside financing. But, by then, it'll probably easier than it is today.

However, one European lawyer in the Gulf strongly encourages all parties interested in investing their money in Dubai to take a very careful look at what they are doing. Registering the property in the land register is key, as is the main developer's "release" of the plot. In the case of "The World," that would be Nakheel, the company that made the islands. Nakheel's sleek fleet of company boats still plough though the sea off Dubai just like they did in the best of times, but the company's future is still uncertain. In the very near future, Nakheel will have to pay back a $4.1 billion loan. Likewise, its parent company, Dubai World, is standing under a $22 billion mountain of debt, and it currently has no idea how it is supposed to even start chipping away at that figure.

Confidence & Depression

There are also other questions that have not been conclusively answered which potential investors in Dubai should ask. What kind of residency status do foreigners get if they own a house or piece of property in Dubai? What are the conditions associated with bequething a house or property in Dubai to someone else? And when a developer and an investor get in a fight, on what legal basis is it resolved?

"I don't have any worries about the islands on 'The World'," says Alexius Goeschl, 59, a certified public accountant who advises Kleindienst. "For yacht owners, things are ideal out here: You're far away from big-city traffic but only 15 minutes from the beach. I'd love to be able to buy one of these villas for myself."

Depending on where you are in Dubai these days, things look either bright or completely dire. In February, John O'Dolan, an auctioneer and entrepreneur who also owned the "Ireland" island, took his own life. He had over-speculated. And it's now an open question what will happen with "Ireland," which lies just a few hundred meters away from the "Germany" island.

On the other hand, there's also some good news, like the one that calmed shaky nerves on Monday: The government of the United Arab Emirates announced that it was raising the salaries of civil servants by 70 percent. So, there is some money there -- perhaps not in Dubai, but at least in Abu Dhabi, the oil-rich emirate next door.