There is often magic to be found where you least expect it.

Above ­MacCallum's fish shop in Finnieston, Glasgow, for instance: glance up from street level and the building looks a classic brick warehouse; climb the several flights of stairs to the attic loft and you enter a whole whimsical world of penny farthings, honky-tonk pianos and sepia-tinged vignettes.

This is where the artist and filmmaker Sven Werner keeps his studio. Like his work, the space is a walk-in treasure trove of quaintly industrial, wistfully stylish steam-punk. Everything looks so fondly constructed and so perfectly faded that it could all be a set for an old-style animation (and in a way it is: more on that to come). There are umbrellas upturned as lampshades, Singer sewing machines that spin around open piano strings and gold-tipped ceramic ear horns dangling from the ceiling.

The penny farthing is Werner's daily mode of transport: you might have seen him riding it around the city's West End. (He gives me a shot, which is terrifying. How does he stop at traffic lights, I ask while nervously clambering down from the high perch? "Gradually," he replies with a smile.)

There is a touch of the mad inventor about Werner. He is tall with wild black hair, and on the day I visit his studio he is dressed in a blue lab coat. He was born in Belgium, brought up in Luxembourg, trained at film school in Ireland and lived in Berlin before settling in Glasgow with his girlfriend, the ceramicist Louise McVey. He speaks English with a slow, singsong lilt.

Werner came across the studio three years ago when he was cycling around the neighbourhood. He struck a deal with the MacCallums: he would work Saturdays in the fish shop in exchange for use of the space. "At first all I had was this old blue armchair I found in the street," he says, gesturing towards a nicely worn leather swivel seat. "I brought it up and sat here for a long time in the middle of the space. I didn't know what was going to happen. It was the first time I had had my own studio; it was a dream come true. Eventually, my ideas grew to fill the space. It is a great gift to give an artist a good space. I don't think my format would have emerged without it."

The format he means is a kind of walk-in film set: an installation technique whereby audiences become directors of their own cinematic experience. In the first parts of his Tales Of Magical Realism trilogy - shown at last year's Sonica and at Edinburgh's Summerhall during the 2013 Fringe - audience members donned headphones and were guided through a labyrinthine series of scenes, ending up on bicycles pedal-powering their own tiny film screens. It was fun and enchanting and strangely haunting.

I ask Werner why he is attracted to this sort of dream-like interactive aesthetic. "In filmmaking all your efforts go towards this perfect illusion of a world," he replies. "But I have always enjoyed using montages to trick the eye. It is a poetic filter between you and reality. Realistic films have their place, of course, and German cinema is full of great realism. But I like to be taken into a more poetic world and come back out inspired."

We are standing in front of the third part of Tales Of Magical Realism, which will be shown in Werner's studio as part of this year's Sonica. It is beautiful and sweetly melancholic. A cityscape - New York, maybe - shimmers across a water that bobs with buoys, while a series of lonely figures gaze yearningly towards the skyline. Dangling from above us are a series of ear horns (made by McVey) through which the voices of the characters will whisper their stories. Audience members can tune in to each one, or stand back to let them all wash over as a soft din.

WERBER says the best art happens when you can see the tricks behind it but still feel enchanted. "I want people to walk around the installation and zoom in and out of detail. Maybe it is to do with questioning reality. I make a world that is from one angle very charming, that can disintegrate if you want it to, but that can quickly refind its sweet spot if you stand back again."

Just as his work often deals with lonely travellers, Werner designs his installations to be experienced individually. There is a certain kind of intensity, he says, a heightened sense of awareness, that comes from being alone. "When you are travelling on your own you can tune into what is around you. That is the idea behind the individual journeys I create for audiences. People experience it alone, together."

How does the piece fit into Sonica's programme? The festival's strapline is 'sonic art for the visually minded', honing its emphasis on the audio side of audio-visual work. Yes, says Werner, sound is vital to his Tales. "If you mute film you fall out of it straight away." The soundtrack to his hazy, faraway world above the fish shop will include a tower clock slowly beating time and music played by pedal-powered sewing machines wrapping threads around the strings of the open upright piano. For the rest, we will have to wait to find out.

What is certain is that it's all incredibly evocative, like a dream half-forgotten but fully familiar. "My mum always called me a dreamer," says Werner. "As a kid I would look out of the window, zoning out. I was very happy by myself. I loved my talking books. Films often spell things out too much so that you can't make the characters your own. I make sure I don't over-spell things out in my work. I like to leave a lot of dark corners so people can make the stories their own."

The Escapement is at Sven Werner's studio at 71 Houldsworth Street, Glasgow, from tomorrow to Sunday between 5pm and 9pm