By
• ROSE JACOBS

There was a time when Bavaria’s premier sports stars, businessmen and politicians secluded themselves in leafy, mansion-studded suburbs south of Munich. But urban life—grittier, livelier, more public—is making a comeback among the richest inhabitants of the richest state of one of the strongest economies in Europe.

At a Crossroads

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Florian Peljak for The Wall Street Journal

The Glockenbach section just south of Munich’s city center is luring more restaurants, boutiques and high-end developments into the area that has been slowly gentrifying since the 1980s.

That means that today, visitors to Munich, where Oktoberfest is now unfolding, might wander into what was once an inner-city, working-class neighborhood and find themselves ordering a drink next to Bastian Schweinsteiger, Bayern Munich’s star midfielder; basketball player Steffen Hamann; or the Canadian, Dutch or Croatian consul-general.

The Glockenbach neighborhood, or Glockenbachviertel, sits just south of the Bavarian capital’s city center, alongside the Isar River. A center for millwork in the early 19th century, the neighborhood became home to factories, their employees and Munich’s Jewish community. Albert Einstein attended high school there.

In the 1980s, Munich’s gay community began a gentrification wave that turned the area into a party zone, but in recent years, nightclubs have given way to boutiques and skateboarders now make room for baby carriages.

This latest transition to high-end enclave is provoking some hand-wringing and even protests, in part because of its sheer speed. Munich, a city that grew from 1.35 million inhabitants in 2007 to 1.45 million today, has seen average property prices this year rise steeply: from €4,000 per square meter in 2010 to €5,800 (or from $494 to $716 per square foot), according to recent municipal statistics.

Meanwhile, the Glockenbach has seen prices for luxury apartments surge to $1,852 to $2,470 per square foot.

The neighborhood’s highest-profile—and highest-priced—new development is the Seven, a commercial, office and residential redevelopment of a decommissioned power plant on the northern edge of the Glockenbach. The complex, including a 15-story tower, offers views of the Alps from the penthouse, which reportedly sold for $26.7 million to a local businessman. (The developer declined to comment on the price.) Building amenities include private gardens, a private spa and access to an on-site nursery school, a scarce commodity in the city.

The three-building complex, due to open early next year, is boasting the most expensive units in Munich. All of the apartments already have sold.

Not everyone is thrilled. Neighbors have organized protests against LBBW Immobilien Capital and Alpha Invest Project, partners behind Seven. Local complaints about noise and dust from construction have coincided with wider concerns about rising property prices and rents. The Seven developers declined to comment.

Stefan Höglmaier, founder and president of another developer, Euroboden, and himself a Glockenbach resident, argues that it is difficult for any neighborhood to resist gentrifying forces, and particularly this one, given its prime location near the city center and the river.

The Isar is bounded by rebuilt natural shores popular with picnickers, and wooded jogging and bike paths. Another selling point of the neighborhood: its appeal to affluent young people. The Glockenbach’s brand of luxury is more idiosyncratic than, say, Maximillian Street, on the northern edge of the old town, where Cartier, Gucci and Valentino sell their wares.

“Glockenbach is where rich people live if they’re also cool—or if they at least want to be cool,” Mr. Höglmaier jokes.

He is selling his penthouse in one of Euroboden’s four Glockenbach developments, a redesign of a five-story 19th-century apartment block by Thomas Unterlandstättner Architects, completed in 2007. He expects the 2,152-square-foot space on Reichenbach Street to go for about $4 million.

That figure is in line with prices at Glockenbach Suites, a 25-unit residential complex by developer Concept Bau that is planned for where Frauenhofer Street—along which one of the neighborhood’s two tram lines run—meets the river. Construction is due to begin in October; nearly half of the apartments already have sold, the developer says.

Demand for apartments in the Glockenbach comes mostly from professionals seeking a primary home—a mix of singles and families, mostly German. The apartments are rarely on the market longer than two or three months, says Maximilian Riedel of real-estate agents Riedel Immobilien. In a country with homeownership rates of about 50%, among the lowest in Europe, rentals go even faster, he adds.

Other buyers in the area include older couples looking for a pied-à-terre, says Andrea Herzer, head of sales for Concept Bau. A few are purchasing units to rent out, she says, but she doubts any are the type of foreign buyer who only wants to live in the unit a couple of weeks a year.

Norbert Stephan, an engineer with Siemens, rents in the area with his wife and 4-year-old son. He says he has no plans to leave, even though he fears rising prices will drive out the creative people who make the Glockenbach appealing. “I see Bastian Schweinsteiger regularly, and I don’t think he wants it to be just a luxury zone either,” he says, “The guys with money who live here aren’t just looking for the best restaurants.”