I must admit I'm completely out of touch with what's going on with underwater regions but from what I understand U16 is currently empty and there is probably at least one more underwater region to the east of it.
There are no meaningful restrictions on race, provided that it broadly speaking makes sense (i.e. that your people can survive underwater), so if you were going to start underwater that would be pretty much a given. Since the majority of people have terrestrial species, something that can breathe air at least for short periods would make it a lot easier to interact with the rest of the game at events and the like. Gengy's people are shapeshifters for this reason. Way's underwater people (not his primary region) are I think fully aquatic so you have odd scenes like them dragging a fishtank into events, while I think the Nix are fully amphibious. There are a couple of rules to do with where you can build troops and what kind of troops and so on but there's no need to worry about that just yet.
Something I would recommend in the strongest possible terms, especially if you're not going to start with an established NPC, is looking into vassalage. It may not sound terribly appealing on the face of it but it's arguable that being a Greater Vassal is just about the cushiest position in the game, and vassals tend to get advantages that other players don't, like free technologies (and military backup from their liege). A number of our new players have struggled to get off the ground recently and I think their refusal to consider vassalage has been part of the reason why (whereas conversely, those who've effectively started as vassals have tended to flourish). If you were to start in U16, for instance, you have well-established players on almost all sides, with relatively little room for you to manoeuvre, so unless you have at least one of them batting for you things might be a bit frustrating.