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Duneman Isle.
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 (crashed Shevat) is explored.
It contains some of the best equipment in the game for on-foot characters, including Citan's best sword, but ironically, due to the state of Disc 2, by the time it can be accessed there is almost no need for this equipment anymore.