BERLIN — The offices of software maker Metaversum are located in the back courtyard of a typical old Berlin apartment house. You'll find it next to the Game Academy, Europe’s first school for young aspiring programmers, and above c-base, a non-profit software organization that operates under the motto, "Be future compatible."

Inside Metaversum, there's an organized calm among the dozens of 25-35 year olds sitting with headphones at their computers. An old pinball machine decorates the hallway.

Metaversum is the developer of Twinity, a 3D virtual world that seeks to mirror the real world with real people and real places. Just like in the real world, "Twinizens" rent apartments, run businesses, go shopping with friends, watch movies or listen to music together. The Berlin version is currently in beta testing stage, as is a virtual Singapore. London and other cities are in the works, too.

Jochen Hummel, the founder and CEO of Metaversum, moved to Berlin from Brussels three years ago. "It’s cheap here, the talent is here and there are plenty of other computer software makers nearby” he says.

Hummel is not alone.

There are now more than 2,600 software companies in Berlin.The number has more than doubled since 2000, making software the fastest-growing sector in this city’s vibrant “creative economy."

Information technology employs some 38,000 Berliners, and the industry produces combined annual revenues of 7 billion Euros ($10 billion). The Germany capital has also become the center for mobile entertainment content and video games, here in Europe's largest economy.

“Knowledge and creativity are the most important resources for a metropolis like Berlin," says Berlin's popular mayor Klaus Wowereit. "These are the driving forces of Berlin’s economy in the last 20 years since the fall of the Wall."

It's not just IT. Grouping together designers, artists, musicians, film producers, ad agencies, book publishers, media and software makers, the government estimates the creative economy has grown by a third since 2000, with an annual turnover of 19 billion euros ($27 billion).

“For many creatives from around the world Berlin is the place to be,” Wowereit says.

The mayor is, of course, also happy to point out the successful cooperation between industry and the city’s many universities and research institutes, such as Adlershof, one of the world’s largest science and technology parks.

Thanks to all these centralized and creative brains, Berlin has also evolved into a major center of the German biotechnology and healthcare industry. Pfizer moved its German headquarters to the capital last year, and the region around Berlin has one the biggest cluster of solar power firms in the world.

Berlin's economy needs the help.

While the capital’s gross domestic product grew 1.6 percent last year, a drop of 4 percent is expected for 2009. Unemployment stands at a whopping 15 percent with some central districts reaching 20 percent. Berlin’s debt, meanwhile, is currently at 60 billion euros ($85 billion) and is forecast to jump higher as the government struggles to cope with the global economic meltdown.

So Berlin is hoping to cash in on its hip image, one that Mayor Klaus Wowereit glorified in his 2003 slogan that "Berlin ist arm, aber sexy" (poor but sexy).

Berlin’s Chamber of Industry is urging the government to offer more help to companies with financing, lowering taxes, and strategies on how to cope with the city’s oversized bureaucracy. "It would be just nice for the city to acknowledge and tend to its small companies more," said Metaversum's Hummel.

Until then, the creative economy marches on. Earlier this month, Berlin’s Fashion Week was a big success. The trade show was housed in the historic former airport Tempelhof, the site of the Berlin Airlift of 1948 and 1949. This year Berliners got a showcase of Levi’s, G-Star and Pepe Jeans.

The show also landed Berlin a visit from International Herald Tribune’s influential fashion journalist Suzy Menkes, who declared the city “ raw, hip and happening."

More GlobalPost dispatches from Germany:

Rebuilding the Berlin Wall

Germans and the murder of a Muslim

Cold War tourism at Fulda Gap

(Editor's note: This story was updated to reflect new information about upcoming Twinity cities and beta testing).

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