Three-person studio Alpixel Games (creator of Missing Translations) has announced A Place for the Unwilling. It’s described as a narrative adventure in which the city is the real protagonist.
There’s said to be no puzzles or “Game Over” screens in this adventure. You simply explore this shadowy city and uncover the dozens of stories that are contained within.
“In terms of gameplay the game resembles "Pathologic" or the sidequests on "Majora’s Mask"(if you were to remove all the fighting and the time-rewinding and add Lovecraft to the mix),” writes Alpixel Games. “You’ll be free to explore the world around you and play a role in the events which will shape the future of the city.”
Most notably, A Place for the Unwilling already displays a strong visual style, with eerie hand-animated street scenes and buildings that resemble sketches. You can follow its development over on the TIGSource forums.