A shabby area of Berlin best known for its curb-crawling prostitutes and drug dealers is recovering some of the Bohemian allure of its glory days in the 1920s as low rents and its central location lure art galleries.

Art lovers are surprised to discover such a wealth of galleries on and around Potsdamer Strasse, a long artery stretching southwest from the revamped and now-glitzy Potsdamer Platz to the traditional gay stronghold of Schoeneberg.

The galleries, numbering nearly two dozen, are often tucked away in quiet courtyards or hidden in grand 19th century buildings.

"This creates the kind of intimacy art lovers appreciate. Visitors feel exclusive as if they were discovering secret places," said Sassa Truelzsch, whose eponymous gallery off Potsdamer Strasse focuses on contemporary art installations.

"I was the first one to move here (in 2006) and I felt as though I was the only gallery owner in Berlin. Visitors arrived by chance, surprised to find an art gallery in such a context while today we count almost 30 visitors daily," she said.

Also helping to draw in both new galleries and visitors is the area's proximity to such architectural jewels as Mies van der Rohe's glass-and-steel New National Gallery and Hans Scharoun's tent-like Philharmonic concert hall.

The process is typical of Berlin's dynamism and capacity for reinvention, said Juerg Judin, a partner of the Nolan Judin gallery on Potsdamer Strasse which also has a base in New York.

“Berlin represents a unique case in the art world... The city constantly rediscovers its forgotten cheap areas, making them become in turn the main hub of the city's art scene before disappearing again shortly after."

Weimar glamour

During the Weimar Republic, when Berlin was a byword for Bohemian revelry and sophistication, the arts flourished in a neighborhood where screen idol Marlene Dietrich had grown up and which was also home at different times to filmmaker Billy Wilder and to British author Christopher Isherwood, whose novel "Goodbye to Berlin" inspired the musical "Cabaret".

On a darker note, the area is also home to the Sportpalast (Sport Palace), often used for political rallies in the Nazi era. Joseph Goebbels made his notorious call here in 1943 for 'total war' as the tide of World War Two turned against Germany.

People visit the "Poison Against Time" exhibition by Jonas Burgert at the Blain Southern gallery at Potsdamer Street in Berlin, May 23, 2012 (Photo: Reuters)

Badly damaged by allied bombs, Potsdamer Strasse suffered a further blow with the postwar partition of the city and the erection in 1961 of the Berlin Wall nearby.

David Bowie and Iggy Pop provided some light relief in the 1970s but the area mostly struggled to forge a positive new identity. After the fall of the Wall in 1991 much of the artistic talent headed to the cheap, newly trendy former communist east.

Now, with the old East Berlin a victim of its own success and no longer a cheap option, the pendulum is swinging back.

"The charm of Potsdamer Strasse is its authenticity and its being a real place," said Dieter Funk, co-owner of the Ave Maria shop selling religious memorabilia and an adjacent restaurant dedicated to Joseph Roth, Austrian-born author of classics such as "The Radetzky March", who also lived here in the 1920s.

The restaurant is a popular meeting place for representatives from Berlin's art world as is also the nearby 'Freies Museum' (Free Museum), housed in the former headquarters of the Tagesspiegel newspaper on Potsdamer Strasse.

Truelzsch is optimistic about the area's prospects.

"Potsdamer Strasse can really establish itself as the new Berlin pole for art having as its center the New National Gallery and the Philharmonic," she said.

"People live here, the area is fantastic and still has much to offer and much still to be discovered."

A passer-by looks at hat designer Fiona Bennett (2nd L) and her assistants work in Bennett's studio at Potsdamer Street in Berlin, May 23, 2012 (Photo: Reuters)

People are reflected in a shop window as they walk in Potsdamer Street in Berlin, May 24, 2012 (Photo: Reuters)