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The Duneman Isle is a monster-riddled desert island choked with quicksand due west of Ignas that appeared after Deus and the -Seraphs- began reverse-terraforming the Xenogears planet. It became a home of the Dunemen which live in the Duneman Republic, desert-dwelling demi-humans akin to the Sand People of Star Wars fame. Another prominent resident of the island was a massive black dragon who hides behind a shifting sand waterfall.
It can only be visited in Disc 2, after the Snowfield Hideout is explored.