The world stood in awe at the sight of the forest of building cranes swaying above Potsdamer Platz, the biggest construction site in Europe, after the Berlin Wall fell and the once divided city finally began to emerge from the rubble of its tortured past. And yet compared to what Berlin still has on the drawing board, the development of Potsdamer Platz and other choice properties in the city was just the warm up. Twenty years after the beginning of the reunification of Germany, Berlin remains a work in progress. And, as the city continues to redefine itself and shove busted-up piles of the past aside to make way for new buildings, opportunity beckons for the entrepreneurial minded – from property investors to restaurant owners, hotel operators and anyone with determination – to get in on one of Europe's last major urban makeovers.

Unlike other European urban developments, Berlin is not marketing secondary properties on the edge of town. For the past 20 years, it has been rebuilding the very heart of the city, and the development projects are one-off opportunities that may never come again. The city built the first new central train station in Europe in more than a century. And when was the last time a new international airport was constructed in Europe? "The locations are so exceptional that investors know they will find tenants for hotels or offices because of the location," says Holger Lippmann, the director of Berlin's real estate agency, Liegenschaftsfonds.

The remaking of Potsdamer Platz was legendary. Once the busiest intersection in Europe, it became one of the most fortified borders in the world during the Cold War when American and Russian tanks held each other in check for decades. Today, Potsdamer Platz is once again bustling with life. The land mines in no-man's-land have been dug up and replaced with high-rise office towers, a Ritz Carlton five-star hotel, swank penthouse nightclubs with spectacular views of the city, shopping centres, cinemas, and the white billowing sails of the Sony Centre entertainment plaza – a landmark of the new Berlin.

Yet Berlin is still on the move. Even as the global financial crisis put the brakes on large property developments around the world, the German capital has continued to build.

One of the major projects underway is the revitalisation of the area around Humboldthafen, which was Berlin's oldest and largest inner city harbour before the Second World War. The harbour area became derelict after the Wall was built, but now the city has begun development of a new district with hotels, conference centres, shops, apartment buildings, and art galleries covering some 913,000m2 of area, even larger than Potsdamer Platz. Some of the land is owned by the city and some by property developer Vivico Real Estate.

"There will be a lot of building activity there in the next three to five years," says Lippmann.

For all the change that has taken place in Berlin, some of the most transformative projects are still on the drawing board. In the centre of the city, on Alexanderplatz, the expansive barren concrete landscape left behind by four decades of socialism has gradually given way to capitalism's icons: a Galeria Kaufhof department store and Alexa, a mauve-coloured shopping centre that opened in 2007 to a throng of 5,000 people who forced their way into the centre, the pressure of the crowd breaking the windows. The most recent addition is a modern multi-storied glass cube that houses Saturn, the electronics retailer, which opened earlier this year. The city plans to build a series of high-rise office towers on Alexanderplatz to complete ideas to develop the square that were first hatched during the Weimar period.

"It's difficult because of the economic situation, but the development at Alexanderplatz will be one of the biggest office developments," says Roy Frydling, director of the German offices of Savills, the property consultants.

One of Berlin's greatest challenges is the city's high unemployment rate. At around 15%, it is well above the national average. For years, business leaders have urged the city to build an international airport to make it easier to get in and out of the city and attract investors and boost the local economy. Thanks to legal challenges from local residents and irregularities in the contract tenders that led a court to order a new tender, it took more than 15 years to get the shovels in the ground, but Berlin is finally moving ahead with the construction of Berlin Brandenburg International (BBI), a major new airport that will initially handle some 20 million passengers each year. The airport will include an industrial park, hotels, a convention centre, and an office park for service industries and will transform the sleepy town of Schönefeld south-east of Berlin into a major travel hub.

"The airport could have a meaningful impact on Berlin," says Michael Haddock, head of European research at property consultants CB Richard Ellis. "We could see a significant upturn in occupier markets."

One company betting on the future of Berlin and its airport is Segro plc. The UK property company was one of the first to invest in the airport development. Segro bought 37.9ha of land to build warehouses and logistics facilities at the airport. Ian Coull, Segro's CEO, says he is optimistic about the long-term prospects for Berlin, despite the hard knocks the economy has taken in the recession."Germany is going through the worst GDP fall in the last 30 or 40 years. But the German real estate market is a very strong market," he says. "There is much less volatility than in any other market, so I think that will remain an attractive proposition for all of us."

The new airport will merge the operations of three Berlin airports: the old East German airport at Schönefeld, Berlin Tegel and the iconic Tempelhof. Tempelhof, whose Nazi-era terminal building was once the largest building in the world, closed for business last October. The city still does not know what to do with the 400ha area. Some advocate turning the former airport into a huge park – it is bigger than New York's Central Park. A city official once seriously suggested flooding the grounds to create an inner-city lake for recreation. One weekend in August, the grounds hosted an open-air music festival. Most likely, though, there is just too much money to be made on development of housing, offices, shopping and entertainment facilities to create yet another park in one of Europe's greenest capitals; Berlin's mayor, Klaus Wowereit, says he favours an "eco-city".

"The marketing and development of Tempelhof airport will surely be a significant high point of urban planning," says Lippmann.

So what about the future of Berlin development? Because of its history, Berlin is one of the most underdeveloped property markets in Europe and rents are dirt cheap compared to other metropolitan centres around the world. Office rents in Paris and London are two to three times what you will pay in Berlin. Investors are betting on the city's future, that economic growth and development will drive prices higher. "Where else in the world can you rent an apartment in the city centre and pay €4 or €5 a square metre?" says Frydling. "That is the medium- to long-term perspective here. Rent cannot stay that cheap forever."

Berlin Hotspots

Potsdam The rumours pop up constantly that Tom Cruise, or Brad Pitt and Angelina Jolie are house hunting in Potsdam, the island city on the southern edge of Berlin that is the most expensive real estate market in the former East Germany. Home to Prussia's Versailles, the Sanssouci gardens, Potsdam has grown from a garrison outpost to Berlin's bedroom for the rich and famous. Its luxurious villas overlook a string of fabulous lakes that are popular for bathing and boating. Potsdam's residents include Matthias Döpfner, CEO of Axel Springer Verlag, Wolfgang Joop, the fashion designer, and supermodel Nadja Auermann. Even if Potsdam is gaining traction and there are fewer villas on the market, there are still a few bargains out there. Consider Villa Kampffmeyer, a 17-room property built for German grain trader Kurt Kampffmeyer in 1923. It is a waterfront neo-baroque estate with 900m2 of living space and 27,000m2 of property. The property was confiscated by the Communist government in 1952 and used initially as a youth club and later by the Stasi. Because the interior needs substantial renovation, the asking price is a mere €5.8m.

Berlin Mitte In the 20 years since the fall of the Berlin Wall, Berlin Mitte has gone through many transformations. After the Wall fell, it became synonymous with the Wild East. Youth from around the world arrived in Berlin and transformed Mitte's dank basements and courtyard cafés into vibrant all-night party dens pulsing to a techno beat. The Wild East has been tamed somewhat and now Mitte is more a playground for tourists, politicians, lawyers and lobbyists frequenting the elegant restaurants around Gendarmenmarkt. And while Berlin is well-known for its cheap rent and large apartments, Mitte is gaining a reputation for its more exclusive digs. Consider the project Dorothea's Place, a luxury residential development on a property in Mitte initially allotted by none lesser than Prussian Princess Dorothea von Brandenburg, whose bones lie at rest in the nearby Berlin Cathedral. A five-room 245m2 penthouse apartment in the building with a view of the Museum Island and central Berlin is a steal at €1.9m.

Berlin Brandenburg International Airport One of the most exciting parts of Berlin's new international airport is not up on the runway, but beneath it. Deep in the ground below what will be the main terminal, Deutsche Bahn, the German railway, is building a train station with three platforms that will serve high-speed ICE trains, commuter trains and the local tram system, shuttling travellers between BBI and downtown Berlin in just 20 minutes and connecting them to international destinations. Presumably there will be convenient express connections from the city's main train stations: Hauptbahnhof, Alexanderplatz and Ostbahnhof. Berlin sorely needs to improve connections to the capital city if it wants to boost the local economy. Today, there are no direct flights from Berlin to Washington and just one direct flight a day to New York. The airport is scheduled to open in 2011 and will initially serve more than 20 million passengers a year. The terminal is built using a modular system that allows BBI to quickly add more capacity, enabling the airport to expand service to up to 40 million passengers without major new construction.