Combine the water, coconut milk and sugar in a pot and bring to a boil over medium heat until smooth and creamy. Cool. Stir in the eggs and condensed milk.
Preheat oven to 200°C (approximately 400°F). Pour the mixture into a greased baking dish and bake about 50-60 minutes. Turn out the flan and cut into 6 to 8 servings. Sprinkle with grated coconut and serve while warm.