The street that Yunus Uygur once thought would lead him to happiness is still in darkness as he sets off again, not yet deterred from seeking his fortune. After a night spent at the wholesale market at Westhafen his old VW van is loaded up with bananas, grapes and tomatoes as he drives down Schönhauser Allee, one of the arteries running into Berlin from the north. To the south the TV Tower projects into the black night sky like a giant map pin, a navigation system marker for the real world. That is what it is for Yunus Uygur, because where Berlin's streets converge at the TV Tower, lies Prenzlauer Berg. And the people who live there, he had been told, are young, friendly and open-minded.

Five months ago he opened his fruit and veg shop at Milastraße tram stop. A little window and a lot of hope after five years of unemployment that engraved deep lines in his face. He looks worn for a 37-year-old. Yunus Uygur is a Turkish Kurd from Reinickendorf, he would like to be able to afford to send his three kids on school trips again. That is why he is here. That is why he is not even bothered that his business is squeezed between two gay sex shops. "Life here is like that," he says, and shrugs his shoulders. Uygur is a man of few words, and his German is poor.

He is part of the silent trek of labour nomads who make their way to Prenzlauer Berg early every morning to supply the Germans with fruit and vegetables, flowers and wine. From the prefab housing estates in the east come the Vietnamese, from former West Berlin the Turks; their arrival goes largely unnoticed. "People here sleep long," says Uygur with a thin smile. Around nine they start appearing at his tram stop, gripping takeaway coffees. The women so beautiful! The men sporting well-groomed designer stubble, not unshaven for lack of time like our shopkeeper. Uygur says they are probably as old as he is, but they seem like children to him. So carefree. So chubby-cheeked. And so uncompromising. They scrutinise his fruit and ask, "Where do these bananas come from? Are they organic?" And when he says "Fresh from the wholesale market" they put them back. Everything is so different in Prenzlauer Berg. Disappointment churns in the pit of Yunus Uygur's stomach, and in his mind a question has grown: Can good people be bad too?

Seen from the air Prenzlauer Berg is a triangle of pre-1914 apartment buildings, a wedge at the heart of the capital, restored and tree-lined. No more than eleven heavily built-up square kilometres, home to 143,000 inhabitants. More than half of whom are between 25 and 45. Many people living in the former West Germany have a daughter, a son, a nephew, a niece, a friend who has moved to this piece of East Berlin. The district has been changing so quickly that statisticians struggle to keep up. Between 1995 and 2000 half the population was replaced, estimates for the entire period since reunification stand at over 80 percent.

The proportion of university graduates has more than doubled, in some streets it has increased five-fold. In no other part of Berlin are so few residents dependent on state benefits. And because young people do tend to push out a kid or two after all, before old age sets in, the playgrounds are also densely populated.

People here like to think that Prenzlauer Berg is the most fertile part of the country. They see themselves as modern, multi-cultural, politically left-alternative and well-informed. At the last national elections the Greens got 24.1 percent. Lichtblick, far and away Germany's largest supplier of green electricity, supplies 6,100 households here with "clean energy." In Darmstadt, whose population is the same as Prenzlauer Berg's, the figure is 286. Here it is easy to feel you are doing everything right. That is why Prenzlauer Berg has become the holy grail for many young people all over the country. For those who already live here it is the test bed of the Berlin Republic. This is where Germany has reinvented itself after reunification. But what is the outcome?

"Wonderrrrrrrrful!" cries Andreas Stahlmann, and his enthusiasm echoes back through the empty penthouse flat he has just sold. Everything about Stahlmann is thin: his face, his figure, his tie, his fingers; only his thick black glasses sit like a crossbeam on top. Stahlmann has been selling flats in Prenzlauer Berg for about ten years. He is a newcomer too, he came from Bad Oeynhausen and "got stuck here," as he puts it. Just in the streets around Kollwitzplatz, the epicentre of the development, he has sold about 700 flats, but now he only does penthouses. "I'm too lazy," says Stahlmann, adding that the words "penthouse" and "Prenzlauer Berg" were all the incentive he needed. His customers from all over Germany are "overwhelmed by the aesthetic here. All I need to say is that it's Europe's largest single redevelopment area. East and West are growing together here faster than anywhere else in Germany. And you should see the sort of stuff that sits about in the cafes here!"

To be part of all this, to buy into a bit of lifestyle, is worth 3,300 euros to Stahlmann's clients. Per square metre. One in four buyers pays outright, and the average capital ratio is 60 percent. "The more cash they have the less difficult they are," he says. And that makes things even easier of course.

You would think that Stahlmann's stories would give us little more than a glimpse of the residential fantasies of an elite. But in fact nobody can document the top-down reinvention of Prenzlauer Berg better than he. In the flats he sells the kitchens take centre place, the good life, flanked by floor-to-ceiling shelves of chunky books. "I always ask my buyers if they will be bringing more than 3,000 books – because then I have to review the statics." In his files Stahlmann identifies "a new intellectual class that has shaped the transformation of values in Germany over the past twenty years." Here, above the roofs of Berlin, the Red-Green leaders of the nineties are treating themselves.

Even Stahlmann is amazed when he visits buyers a few months after they have moved in. Flower arrangements fit for a church. Vases that graze the ceiling. One of his buyers had his own fireplace installed for an extra 130,000 euros just to make things a little more cosy above the hustle and bustle of the city. In his brochures he cites the educational qualifications and the unemployment rate of the respective neighbourhood. Buyers want a hint of big city thrill, without having to look down on too much misery.

Andreas Stahlmann describes Prenzlauer Berg from above, Yunus Uygur is getting to know it from below. If all you can say is "fresh from the wholesale market" then you have to be cheap and open all hours, at night for emergencies, in case the organic eggs run out in the penthouse. Uygur opens almost round the clock now. He has stopped going home, he sleeps in his shop. You can search for a long time without finding the trapdoor in the floor, hidden among the beer crates, where steep wooden steps lead to a cellar with bare, slum-like walls. In the middle a mattress. Here Uygur sleeps for three or four hours before he sets off for the market again, or rather he dozes, because the trains make the floor shake. "Nobody on this street lives like me, nobody in the year 2007," says Uygur. Outwardly he maintains the dignity of the businessman, but inside his merchant pride is wounded. He is in the right place with the wrong strategy. He has no idea that he has to serve a lifestyle here. A better class of food for a better class of person. He thought it was about ordinary food: carrots, leeks and onions.

Maybe being normal is wrong in a place where many people came to flee normality. The few original residents divide the newcomers into "Eco-Swabians" and the fashion conscious "Bug Eyes". The latter pay great attention to their deliberately scruffy appearance and can be identified by their enormous sixties-style sunglasses-cum-facial-windscreens. What the older residents overlook are the hordes of inconspicuous waverers between these two cultures, who have assimilated with one or the other to a greater or lesser extent.

The Bug Eye catwalk is Kastanienallee, which these days is generally only referred to as "Casting Allee." One event two years ago here attracted attention precisely because it attracted so little attention. Because black men had been selling drugs in a nearby park, the owner of one cafe, instructed her waitresses that black people were no longer welcome in the establishment. Unless they were mothers or had "intelligent eyes." A few lefties demonstrated against this wording and the neighbouring landlords expressed their solidarity – with the cafe. Currently they are busy trying to getting rid of band of Sinti musicians which has been playing the streets for years. "They get on your nerves," says one cafe owner, "and if this affects an ethnic group, so what?"

So Kastanienallee is gradually becoming squeaky clean, the shops are as full as ever, and the aforementioned cafe with its cloak of wild vines still looks as romantically left-wing as ever. In Prenzlauer Berg it's so easy to live the lefty life. That's the great thing about it. You can feel tolerant because tolerance is never put to the test. No satellite dishes to insult the eye, no headscarves to provoke debate, no mosques to trouble the global citizens. Here there are few call shops, and the flats are too expensive for the likes of Yunus Uygur. There are no hip-hop dives for Turkish lads from Wedding and Kreuzberg, no infrastructure for noisy underclass youngsters – if they even sit down for a smoke at one of the many playgrounds they will be soon be descended upon by hysterical mums.

These days author Maxim Biller – playing on a neo-Nazi campaign – can ironically call Prenzlauer Berg a "national liberated zone." The proportion of foreigners may be 11.1 percent, only about two percent less than the Berlin average, but the composition is completely different. The biggest group are the French, followed by Italians, Americans, British, Spanish and Danes. A G-8 population, highly educated and employed. Here there are ten times more Japanese than Egyptians. The proportion of Turks is just 0.3 percent.

Prenzlauer Berg is plainly not what it thinks it is, not even regarding its much-celebrated fertility. Here only 35 children are born each year per 1,000 women aged between 15 and 45; that is less than in Wilmersdorf, supposedly the widows' borough of Berlin. In Cloppenburg the figure is 56. In fact, the young people here produce comparatively few children, but they live here in such numbers that they still succeed in changing the character of the area.

The birds are singing in the schoolyard outside Jürgen Zipperling's modest office as he launches into his take on the parallel world of Prenzlauer Berg, and for a headteacher in a prosperous part of town he is surprisingly critical. Zipperling went to school in Prenzlauer Berg, became a teacher here, and shortly after reunification was appointed headteacher at the Bornholm primary school, also in Prenzlauer Berg. He is diminutive in stature but big in voice, schooled over a long teaching career. A voice that often speaks the word "society."

Zipperling can still well remember how this "society" began to change in the early 1990s, when "whole streets were up for sale. And then the wave of unemployment. The poor and unemployed left then, along with the few families who could afford a house in the suburbs." Sometimes he would come back from the summer holidays to find four or five less working class kids per class, their places taken by four or five kids from well-educated middle-class families. Zipperling and his fellow teachers are about the only people with Berlin accents at the school. He estimates the proportion of pupils from well-educated middle-class families to be "70 percent at least," while the number of foreigners is "negligible," a handful of kids from Turkish or Polish families in neighbouring Wedding whose parents find the proportion of foreigners at their local schools too high. Truancy levels are not worth mentioning, and almost all the children have already had a good breakfast when the school bell rings at ten to eight.

This might sound like paradise, but Zipperling says, "Some parents act as if they were the centre of the universe." He advises his colleagues to begin each parents' evening by stating clearly when it finishes, otherwise it will go on all night, "because where their own children are concerned the parents are highly concerned and extremely resolute." Expectations are high, trust is low. The threat of switching to one of the new private schools is always in the background. Recently a teacher leaving a classroom bumped into a father who had been listening at the door since the beginning of the lesson "just to get a feel for the atmosphere."

But those are trivialities compared with Zipperling's real worry. When he looks through his school rolls he no longer finds society's middle ground. The skilled trades have left, the blue-collar workers. Only the "extremes" remain, he says, the victims of reunification who were too weak even to leave the borough, and the newcomers with their victor mentality who tend to have little sympathy. His school classes, says Zipperling, "reflect the deep rift in society." Here 1989 was a short sharp shock followed by a spell of almost complete freedom, and now all that is left is rich and poor.

The same day a few streets further south Hartmut Häußermann strides through the colourful autumn leaves on the pavement. Left and right propane patio-heaters glow in street cafes that are filled with breakfasters well into the afternoon. Is their leisure a badge of success or failure? Jazz flows from the speakers, now and then an espresso machine sighs. Häußermann's dark coat and grey hair make him look like a visiting grandfather. Here and there he gets out his camera to photograph facades and businesses. Shop names reveal a lot about the people here. The baby fashion shop Wunschkind (eagerly awaited or planned child). Or the provocatively tight pregnancy fashions in the window of Sexy Mama – where a word like maternity-wear would be far too traditional. "Sexy Mama – isn't that emancipation?" he asks.

Häußermann has a professional eye for cities, he is Professor of Urban and Regional Sociology at Berlin's Humboldt University. For years he has had Prenzlauer Berg under his microscope, street by street, documenting the gentrification of the area, the processes of transformation and rising property prices. "Gentry" means "lower nobility."

But Häußermann is no class warrior. He says that Prenzlauer Berg – unlike any area of newly built housing – had "flair, which did not have to be created from scratch, and the gates were wide open." Young West Germans from good homes were seduced by the dissidents and bohemians, by the smell of revolution in just-habitable ruins, by the necessity of improvising in houses without telephones, by heating with coal. And from there events took their usual course. The wild young things settled down, got jobs and children and wanted property. Now they live pretty much like their parents in western Germany, just in a different setting. Häußermann says that over the years an "unconventional conventionality" has arisen – full of ideals and at the same time very rational. "After the PISA study nobody is going to start a campaign for 'more foreigners in my child's class.'"

Are such happy children maybe missing out on reality? Häußermann says there is nothing wrong with happiness and everybody has the right to strive for it. He does. Häußermann, born in 1943 in Waiblingen, is part of the gentrification process himself. He moved here in 1994 from Charlottenburg. "That was an upper-wage bracket zone, I was among my own kind there," he says laughing. "What drew me here was the youthfulness." You can still feel young in Prenzlauer Berg even if you are getting on. But these days it is too expensive for the ral younger generation, his students. "And of course that is not a good development," says Häußermann, especially given that – and this is a surprise to many – only half the houses have been modernised so far. So the process has really only just begun and even the professor has no idea where it will end. Then he says goodbye and heads off to his favourite baker.

The streets are lined with 1960s Citroens and 1970s Vespas, driven by men with Günter Netzer haircuts. The Kinderstube toyshop sells second-hand toys, 1980s Fisher-Price dumper trucks for 69 euros. Young parents reconstruct their own childhood, as if the present and future had little to offer. Sometimes it seems like a fearful nostalgia for the West in the East. The shops that cater to this yearning for yesteryear – with 1950s coffee tables, record players and those old-fashioned prams with the big wheels – are pricey. But comforting reassurances that what your are buying is "proper stuff" come for free.

While the music school out in Lichtenberg – in Berlin's far east – has to scour the nurseries for pupils, the secretary of the Prenzlauer Berg branch spends her time placating impatient parents. The waiting list for violin, piano and cello lessons is a year long. The demand for pre-school music classes, a must at the begining of every intellectual's biography, is so great that some parents put their offspring's name down as soon as they are born. The children on the waiting lists have names like Paul and Paula, Conrad and Jacob, Marie and Mathilda. These days here, being alternative means being firmly respectable and conventional in an age of a confusing diversity of lifestyle choices.

At the police station the officers are rather evasive when asked about changes in streets and houses they have known for years. Their lips purse, they seem strangely defensive. It turns out that none of them are from here, nowadays services are imported. Prenzlauer Berg is not a district that produces cleaners, builders or even policemen. Rather like Dubai.

For a long time the district had a dreadful reputation in the Berlin police force because of the annual May 1st riots in the 1990s, but things have calmed down now. The reason their patch is still in the upper quarter of the crime statistics is the high number of bicycle thefts, say the officers. And then there are all the calls complaining about noise – from people who themselves were drinking outside just five years ago. The higher the storey the lower the tolerance threshold. And it has become harder to do the job, say the policemen. People even answer back about parking tickets; Prenzlauer Berg has become a do-you-know-who-I-am? neighbourhood.

Outsiders sometimes see things most clearly. At the recycling depot on the border between the rejuvenated apartment buildings of Prenzlauer Berg and the ageing housing post-war estates of Wedding, the refuse collectors – pretty authentic characters these – shake their heads and report that the Wedding people bring "rubbish" while the Prenzelberg lot come with "used stuff." And increasingly the former ask if they can take away what the latter have brought. A social watershed here separates carpeting from stripped floorboards, new poverty from new affluence, pragmatism from spirituality and worry from self-discovery.

Self-discovery seems to be the real business of the wholefood LPG supermarket on Schönhauser Allee, not far from Yunus Uygur's shop. These days the initials LPG stands not for the communist agricultural collective but for the German words for "tasty, affordable, healthy." According to its owner, the store, which opened in the spring and has already become the temple of the eco-Swabians, covers an area of "0.3 hectares" making it Europe's biggest organic supermarket. Bionade crates are stacked high on the ground floor. There are high-fibre cake bases, sheep's milk soap with marigold, blackcurrant juice for 10.24 euro the litre, pure new wool baby rompers for 99 euros, organic cat biscuits with fish and vegetarian dog food. And buyers for all this. People value themselves here. Upstairs they sell stickers for the bathroom mirror: "I am beautiful," I'm wonderful," "I could kiss myself."

On a notice board behind the tills the neighbourhood has pinned up its soul: offers for "Fasting on Hiddensee Island", "Advice on Electrosmog", a talk by a healer on the "Pros and Cons of Vaccination", the "Green Pension Plan" and a "Restorative Sleep Workshop." Urban shaman Seijin offers "Dream Journeys and Soul Retrieval". It is not hard to guess what this section of society is willing to pay to be informed and individual, and you soon start to wonder whether to envy or pity some of the people here. Of course the things Prenzlauer Berg strives for all make sense actually: healthy food, the good life and educated children. But there seems to be no end to this unquestioning self-refinement.

Martina Buschhaus is familiar with this grey zone between common sense and cult of self. As a GP who moved from Wedding to Prenzlauer Berg ten years ago, she thinks it is actually "wonderful" to have overwhelmingly health-conscious people who think about healthy eating and sport. Here you rarely find what she calls the Wedding morbus: "all the consequences of excessive eating, drinking and too much TV watching, namely metabolic disorders and heart disease." But are people in Prenzlauer Berg really healthier, or do they just get ill differently? Prescribing extra vitamin B12 for the many vegetarians is normal, says Dr Buschhaus. But astonishingly numbers of people suffer from allergies, backache, gastro-intestinal disorders. These are the complaints of the stressed-out freelancer, "and if I tell them they should take a break, they say 'not possible.'"

Fortunately, says Dr Buschhaus, her patients are also "open" to the alternative treatments she also offers – although she might mean "over-informed." Fifteen minutes per patient like in Wedding? This is rarely enough these days. Buschhaus diagnoses a strong desire to talk and "a certain degree of loneliness" in the district. More than half the households are single. The psychotherapists are booked out. People listen in on their inner voice, they are extremely healthy and always ill, body-obsessed and overly intellectual, super relaxed and sooo tense. There is potential here.

The ground floor is already in shadow when children's yoga begins in an eggshell-coloured renovated house in the elegant Rykestraße. "Nice Thomas" teaches children's yoga. He was a teacher once upon a time and also ran an advertising agency for a while and now he is a shaven-headed yogi. Nice Thomas says the children who will be arriving any minute belong to parents "who are already on the yoga path and want their offspring to calm down a bit too." Why children should be quiet is not really explained, but normally children's yoga is taught by his wife, Simone, but she gave birth a couple of days ago. Not in hospital of course. Anyway, Simone teaches post-natal yoga now. Yoga is not a bad business to be in at the moment.

Nice Thomas has drawn the curtains on the street side and put a singing bowl and a candle on the stripped-pine floor. In the window is an announcement for a talk by a traveller on the path to enlightenment on the subject of "seelengevögelt by this life" [sic] – causes, ways out, meditation. (Seelengevögelt means something like soul-fucked-ed.) The children come in gripper socks. The eldest is seven. Maxi, the youngest, is three. And Thomas is very nice. He examines every wobbly tooth before beginning a mantra in Sanskrit that ends in a long "ommm". Maxi looks on sceptically and fidgets with her toes. The others do the sun salutation. Thomas proclaims, "… I am as strong as a mountain … stable as a bridge … carried by the earth …" After five minutes Frederic announces, "I'm bored." After ten minutes Sebastian knocks the candle over. "Come on, one more round, I'll help you," says Thomas. He says it gently, but like everywhere else, children in Prenzlauer Berg are shaped to fit their parents' lifestyle. So of course yoga is better than watching cartoons on TV. So they go along with another dream journey. And stifle a yawn now and then. At the end Thomas asks, "Now you probably want to go and mess about, don't you?" – "Yeahhhh!" Then the boys jump on each other. And go off to play football.

You rarely see boys playing football in Prenzlauer Berg, this little triangle of apartment buildings where Germany has reinvented itself. But what has it become?

Wonderrrrrrrrful! But why? In many places in Prenzlauer Berg you would never notice that there had been a debate about the underclass, a demographic problem, migration. Here the Bionade bourgeoisie rules. One hundred thousand newcomers have created a new city. But who benefits from all these advances for civilisation, apart from themselves? Their Prenzlauer Berg is a ghetto that needs no wall, because even without one the place is increasingly hermetic. Access is controlled by the price of housing and by the enormous pressure to conform. Unless you eat, drink and wear the right things you can quickly feel out of place. They think themselves so open-minded but really they have closed themselves off.

Milieu formation is of course a very normal social phenomenon. Across the world people sort themselves according to lifestyle, education, wealth. The special thing about Prenzlauer Berg is the disconnect between self-image and reality.

The sun is already low in the sky and the stucco on the facades is throwing long shadows, as a procession of children in colourful headgear frolics down Schönhauser Allee, on bicycles, wooden walking bikes, on foot. Ringing bells and laughing they make their way to the Babylon Cinema, over the border in Berlin Mitte, where the actress Heike Makatsch will be reading Pippi Longstocking. Heike Makatsch! The perfect fusion of eco-Swabian and Bug Eye: girlie, Prenzlauer Berg celebrity – and now a mum. The room is packed, Makatsch rolls her eyes Makatsch-style and creaks out the story of how Pippi moved into Villa Villekulla, as told by the neighbours' two well-behaved children Tommy and Annika, and of Pippi's first day at school. The cinema is awash with joy. Smiles, cuddles, Sunday sighs. Everybody feels as subversive as Pippi, but really they are as blond and well-behaved as Tommy and Annika. The children sit still and suck red elderberry Bionade through straws, their parents savour Swedish almond cake and at the end they buy the CD. Even a little outside, at the southernmost extremity of Schönhauser Allee, Prenzlauer Berg is still absolutely itself.

Two kilometres further north at exactly the same time Yunus Uygur's wife is in the greengrocer's shop lugging crates of fruit into the storeroom. His daughter is at the till doing her homework. And underneath the trapdoor, in his hole, Yunus Uygur is restlessly sleeping his way to the next night at the wholesale market, soul-fucked by his life. He should go organic. Everything else is bad for you in the long run.


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Henning Sußebach, born 1972, is an editor of the Life Section of Die Zeit. He lives with his family in Berlin.

This article originally appeared in Die Zeit on 8 November 2007.

Translation: Meredith Dale, who lives in a house in Prenzlauerberg which is about to be gentrified.