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12/23/2009

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.

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• Part 1: Developer Moves Forward with Ambitious 'World' Development in Dubai
• Part 2: A Buyer's Market