Nam Cobanda doesn't become available until the third act, after you've gathered the Four Spirits. Once the tower of Tarqaron has risen, you'll notice people talking about drained lakes. You may notice another large inland lake being drained in the world as well.

When that happens, fly with Ba'ul to the northwest corner of the world map. The island there is Nam Cobanda, and the building on it was formerly covered in water. Land and enter the town where there's a break in the trees.

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