A property developer has started building a huge resort complex on Palm Islands, a man-made archipelago off Dubai's coast as the emirate revives tourism and real estate projects suspended after its property market crash in 2008.

The "Heart of Europe" project, a complex of luxury hotels and villas stretching across six small islands, is expected to be completed at the end of 2016, the Kleindienst Group said on Monday.

Lying about 5 kilometres (3.1 miles) off mainland Dubai in the Gulf, it will feature classic Italian, Spanish and German architecture as well as landscaped gardens and streets that in some cases will be lined with artificial snow, the company said.

Kleindienst, an international developer based in Dubai, declined to reveal how much the project would cost or how it would be funded, saying an announcement on this would be made next month. Local press reports have put the cost at over $800 million.

The 60 sq km archipelago, comprising over 200 islands laid out in the shape of a world map, was created from millions of tonnes of sand and rock. It was completed in 2008 as a way to expand Dubai's supply of beachfront property.

Until recently it looked like a costly white elephant. Most of the islands were sold to investors but Dubai's financial crisis of 2008-2010 then put plans to develop them on hold. All but a handful remain empty, baking in the sun.

Over the last couple of years, however, a flood of foreign money into Dubai has revived the real estate market and begun to repair developers' balance sheets, allowing projects to proceed.

As the first big project to go ahead in the archipelago, the Heart of Europe could encourage the development of more islands. In May 2013, Kleindienst cleared an obstacle to the project by agreeing to pay $169 million to resolve a dispute with state-owned firm Nakheel, the original builder of the archipelago. – Reuters