The growth of self organized fully strained Ge dots is accomplished by using a two step process which consists of depositing Ge dots on a periodic unidirectional undulated Si1-xGex (118) template layer. The main reason for this methodology is to make use of the stress driven step bunching that develops on a (118) surface (10 degrees off (001)). In this report we concentrate on the growth mechanism of Ge on the Si1-xGex template layer. RHEED and TEM measurements were used to determine the 2D-3D growth transition as a function of Ge coverage. We find that the onset of the 3D island formation changes from 4 to 7 ML on the (001) and (118) surfaces. respectively. While 3D islands are mainly isotropic on Si (001) they elongate dong the step edge direction on misoriented surfaces with a reduction of their lateral size in one direction. AFM measurements are presented which show the wire shaped Ge islands on the top of the Si1-xGex (118) template undulation with improved size homogeneity. The correlation-length of the undulation is mainly controlled by the Ge content of the Si1-xGex layer, for example 20 nm large islands are grown on the top of Si0.6Ge0.4(118). Low temperature photoluminescence spectra are also described which show the evolution of features associated with the Si1-xGex template layer for Ge coverage between 1 and 6 ML. Dramatic changes of the photoluminescence spectra were found for a Ge coverage of 7 ML, the dominant band seen for that coverage is shown to be related to 3D island formation. The influence of the growth conditions an the PL results is also discussed.