The Kleindienst Group said it will undertake work on location at The World – the cluster of artificial islands in the shape of the world map that are at the heart of Dubai’s multi-billion dollar debt crisis.

“We have interests in industrial, commercial, hospitality and residential real estate, but The World is where we now see the strongest market potential,” company director Josef Kleindienst told a news conference. “Tourist arrivals to Dubai have increased despite the economic slowdown in 2009 and worldwide the market for property ownership abroad has shown resilience, particularly for luxury holiday home destinations,” he added.

The company plans to launch the project in the first quarter of 2010 with the construction of the island “Germany,” followed by plans for Austria, Switzerland, The Netherlands, Sweden and St. Petersburg.

The project, dubbed “Heart of Europe,” is expected to cost a total of $850 million and be completed in 2015, Kleindienst said, adding that it will include villas, hotels and restaurants.

Asked about the risk he was taking – particularly should state-owned construction giant Nakheel go bankrupt – Kleindienst said: “We remain confident in the investment potential of The World. Dubai is a first class travel destination. We do not see a risk at all.”

The company began purchasing the six islands among a cluster of 300 islands that comprise The World in 2006, before the global financial meltdown that pushed property prices in Dubai down by 50 percent.

Nakheel is one of the key subsidiaries of Dubai World, which is facing a staggering debt of $59 billion.

The company narrowly escaped debt default last week after payment was covered thanks to a $10-billion lifeline extended by neighbouring Abu Dhabi, the capital of the United Arab Emirates, of which Dubai is one of seven federations.

Last month Dubai rocked global markets when it requested a six-month freeze on debt payments by the Dubai World group in order to restructure it.

Kleindienst’s announcement came as Dubai World began talks with its lenders on Monday to restructure its $22-billion debt.

Nakheel has put several other larger-than-life Dubai projects on hold, including the construction of a one-kilometre high tower and a city dubbed Waterfront, planned to be twice the size of Hong Kong.