Dubai developer Nakheel has denied a report that its 300 man-made islands shaped like a map of the world are sinking, calling it "wholly inaccurate."

The archipelago sits in the Gulf off the coast of Dubai. Reclamation work on the islands has been completed and 70 percent of islands have been sold to developers.

"Speculative reports suggesting that The World islands are sinking are wholly inaccurate," a Nakheel statement said.

Britain's Daily Mail's website said on Tuesday that a picture from the U.S. space agency NASA suggested that the islands were merging together and appeared to be sinking.

The Gulf Arab emirate, renowned for glitzy development projects that relied on debt for finance, rocked global markets on Nov. 25 with plans to ask for a debt delay on $26 billion   linked to flagship conglomerate Dubai World and its main property units, Nakheel and Limitless World.

The Nakheel statement said the load-bearing capacity of The World islands' reclaimed land mass is about twice that of mainland Dubai.

"A suggestion also that some of the islands have slipped and spread into each other is also completely incorrect," Nakheel said.

"The islands at the centre of The World were merged purposely to create land for specific developments, and the shape of other islands was changed at the request of owners."

The project -- costing $20 million to $50 million for each island -- captured global attention at the height of Dubai's property, boom but has become a symbol of excess as the emirate grapples with a massive debt burden.

It staved off default on a $4.1 billion Islamic bond linked to Nakheel, after a last minute bailout from Abu Dhabi.

Nakheel has been at the forefront of extravagant construction projects in Dubai, including three islands in the shape of palm trees off the coast of Dubai. – Reuters