Eh - as long as he doesn't trick people into thinking that the island is run by a government, then it's fine. As long as he's up-front that this island is his island and that he'll run it the way he pleases, then sure, let em. However - as a citizen of Germany, he still falls under German law. It's a myth that no laws exist in international waters - UN human rights apply to all members of all member nations. Unless he gives up citizenship or pledges to never contact or step foot on mainland again, he's still subject to some laws, especially concerning other people. Sure he can build as many shoddily constructed buildings on his own personal island - but if any of those buildings kills anyone he's still subject to a court of law. Somalian pirates are often arrested, despite there technically being no government in Somalia (usually they are let go because of a lack of evidence (pirates just ditch their weapons in the sea and claim to be fishermen), but some of them have been prosecuted in the US and in Russia. Russia in particular deals with Somalian pirates very harshly - sometimes they "let them go" in the middle of the pacific ocean without a paddle or any food).
As for how this guy's private libertarian paradise will turn out - eh.... less-than-good. You can't really have a place without laws - he'll have to hire security and private security firms aren't always the best police force (boy is THAT an understatement). Building codes aren't "government oppression" anyway - they are just sane, sensible codes for building safe structures. I don't know why anyone would oppose building codes. It's not a libertarian matter - rickety, unsafe buildings are a SOCIETAL hazard. If a shoddy house collapses on another person's house, it's the fault of the owner of the shoddy building. Bad buildings hurt not just the owner, but any children who happen to live in that building, and other building in the vicinity and are just.... bad ideas.
There's a reason why EVERY developed nation has building codes. They make sense. Haiti didn't have building codes - look at what happened during the 2010 earthquake. Japan, on the other hand, had INCREDIBLY strict building codes - and while those building codes didn't (and couldn't) stop the tsunami, I'm proud to say that those skyscrapers didn't fall over in Tokyo, despite the Earthquake being above 9.0. That's an AMAZING accomplishment of Japanese engineering and building policy.