Surrounded by 300 deserted man-made islands, Dubai's newest real-estate wonder has all the amenities of a luxury hotel - plus views of the bottom of the sea.

The Floating Seahorse villas feature submerged bedrooms whose curtains open up to transplanted coral and the waters of the Persian Gulf. Wide-mouthed groupers and other fish dart past its more than 15-centimetre-thick acrylic windows. But the Seahorses, part of an ambitious larger hotel development called The Heart of Europe -…