LUXURY islands in Dubai shaped like countries of the world are sinking, a tribunal heard yesterday. Experts said the man-made project off the coast of the oil-rich emirate is "dead". The World archipelago was intended to have top hotels and villas for millionaires - but work is believed to have stopped following the financial crisis. Now the sands are eroding and the navigational channels between each "nation" are silting up, the property hearing was told. Richard Wilmot-Smith QC, a British lawyer for a company that ferries people to the islands, told the tribunal: "They are gradually falling back into the sea." Penguin Marine is seeking to withdraw from paying fees of £1million a year because there are so few passengers for the development a mile and a half from the mainland. The firm claims work on the islands has "effectively stopped". It was hoped the holiday paradise - one of the most ambitious building projects ever - could become a wonder of the modern world. Developer Nakheel claims 70 per cent of The World's 300 islands have been sold. But the only inhabited island is Greenland - which is a show home owned by Dubai's ruler. And Nakheel admits work on the archipelago is "in a coma". The firm was part of Dubai World, the state-owned conglomerate bailed out of £18billion debts at the end of 2009. Investors who did buy islands also ran into problems after the Dubai property bubble burst. John O'Dolan - whose company bought Ireland for £24million - committed suicide. And Safi Qurashi, who bought Britain for £43million, is serving seven years in jail in Dubai for bouncing cheques. Graham Lovett, for Nakheel, told the Dubai tribunal the scheme was not dead. He said: "This is a ten-year project which has slowed down. This is a project which will be completed." The tribunal found for Nakheel. Last night a spokesman insisted the islands are not sinking.