Ever since Frank Gehry’s fantastically popular titanium Guggenheim branch sparked the rebirth of the gritty Basque city of Bilbao in northern Spain, the contemporary art museum has become a favourite tool to drive urban regeneration efforts.

So it’s perhaps only logical for Berlin – having staked its economic future on the creative industries – to follow the Basque example by confirming this week the construction of a bold new structure for 21st century art right near the city’s new central train station.

“Museums are capable of attracting the people to an area and upgrading it,” Torsten Wöhlert, spokesman for Berlin’s culture ministry, told The Local on Wednesday. “This mirrors the development of Berlin itself, which over the last ten years has become a European, if not global centre for creativity and the arts.”

Wöhlert said details of the ambitious plans for a new contemporary art museum would be officially announced at the end of the month, but the German press reported this week that city had agreed to a controversial deal where a private investor would build an architectural masterpiece in return for the building rights on the exclusive waterfront property right next to the train station.

Most speculation in the Berlin art scene has been focused on Nicolas Berggruen, the son of the deceased art collector Heinz Berggruen. Not only does he have an impressive selection of artwork for such a high-profile project, but he also has good contacts with city officials, according to daily Die Welt.

“The plan is already established,” Wöhlert said. “Berlin will provide only the basics, and others will contribute the rest.”

If successful, the bold museum project will anchor the redevelopment of a massive swath of Berlin’s still barren centre.

Heidestrasse, a long street dominated by cars and flanked by underused warehouses, ends right where the new museum will be built. Perhaps surprisingly, nearly 20 years after German reunification, the road at heart of the country’s capital is essentially a useless wasteland – aside from moving traffic to the nearby train station.

Yet changes are afoot. A number of art galleries – among them the prestigious, Christie’s-controlled contemporary dealer Haunch of Venison – have begun to spring up on the street’s southern end, attracted by cheap and plentiful space in warehouses close to Berlin’s modern art museum the Hamburger Bahnhof.

Bigger than Potsdamer Platz

And the redevelopment of the area is set to intensify after a collaborative design by the architects KCAP/ASTOC and Studio Urban Catalyst was selected last month to form the basis of a master plan for the derelict district. Involving around 610,000 square metres of floor area and 1,200 apartments, the project is around twice the size of Berlin’s vast construction site at Potsdamer Platz in the 1990s.

Those works remain controversial to this day. Writing on the topic in the New York Review of Books in November 2001, the venerable American architecture critic Martin Filler attacked the development as super-sized, anti-urban, and cravenly commercial.

Vivico, the real estate developer which is the driving force between the Heidestrasse project, claims that their own approach is different. “The Potsdamer Platz development was emotionally very connected to German unification,” said the company’s spokesman Wilhelm Brandt. “In a way, it was very revolutionary. Our project is more evolutionary. It’s about the new Berlin Mitte, and about how one can organically grow and develop a quarter.”

Vivico is a former government subsidiary, privatized at the beginning of the year, and now owned by the Austrian real estate giant CA Immo. The holder of vast tracts of inner-city brownfield sites, once owned by railway operator Deutsche Bahn, but bequeathed to the German government in 2001. The company’s last major urban regeneration project was Munich’s Arnulfpark, a large-scale exercise in a mixed-use district that the company say is their working model for Heidestrasse.

Berlin isn’t Munich

But Berlin isn’t Munich, and in a least one major respect, Vivico have altered their development concept dramatically. Whereas the breakneck speed of the Arnulfpark development earned the project the title of “Munich’s Fastest Construction Site,” the Heidestrasse project is expected to reach completion any time between 10 and 15 years – according to Vivico – and 20 to 30 years, according to Studio Urban Catalyst’s principal architect Klaus Overmeyer.

The logic behind this drawn-out time-scale is commercial: while Bavaria’s capital enjoys a lucrative shortage of real estate, Berlin suffers from a less-profitable glut. According to Overmeyer, Berlin presently plays host to around two million square feet of empty office space – a fact that means that natural demand for a further 100,000 square metres is essentially non-existent.

Hence Vivico have been drawn to pursue a slow-burn strategy of artificial stimulation, managed through a series of phases that boil-down, in effect, to successive injections of art. The first of these remains represented in the Hamburger Bahnhof itself – a building that Vivico owns. The latest was completed two weeks ago in the form of the Halle am Wasser, a renovated modernist shed housing six upmarket, commercial galleries.

The Halle am Wasser is the first element of a larger development program that Vivico call the “kunst-campus”. The operational idea is to catalyze the area with creativity, in order to clear a path for more directly profitable developments later.

Vivico’s Brandt admitted they had been surprised by the announcement of the new modern art museum this week, but told Berlin daily Der Tagesspiegel it could only increase the development’s creative pull.

“It’s like a sausage counter – the bigger the selection the better,” he quipped.