The Italian beach resorts of Rimini and Riccione, which offer miles of sand, beach umbrellas and cheap hotels, and have long drawn Italian families on a budget, could move up in the world if plans go ahead to build a Dubai-style artificial island off the coast.

The €1bn (£0.8bn) project, which has the backing of the mayor of Riccione and has the interest of Saudi investors, envisages an island built three nautical miles out in the Adriatic in 12 metres of water. There would be hotels, shops, houses and a marina for 400 boats, not to mention a berth for cruise ships stopping off en route to Venice.

"We were thinking about the development of a different type of holiday in the area, but realised that Riccione and Rimini have been built up, so it made sense to do it out to sea," said Luca Emanueli, the University of Ferrara academic who will formally unveil the plans in February.

The island would be home to 3,000 people, rising to 9,000 in season. "We don't plan a fake sand beach, but bathers will be able to dive straight into the deep water," he said. Saudi investors have shown interest in the project, which will be privately funded, he added.

Dubai's three islands in the shape of palm trees were built to house millionaires, but Emanueli said his island would have a more proletarian feel. "We hope it would feel like an extension of the land," he said.

The island would follow in the footsteps of the Isola delle Rose, a 400 square metre (4,305 sq ft) platform built in the Adriatic in 1968 for an Esperanto-speaking community that declared itself independent from Italy, formed a government and coined its own currency until it was occupied by police that year and demolished in 1969.