Plans for Frank Gehry's 150-metre building off Alexanderplatz given go-ahead, but critics doubt regenerative claims of project

A journalist looks at the model of the Hines tower, right, the construction of which is expected to start in 2015. Photograph: Britta Pedersen/Corbis

The tallest residential block in Germany is to rise up next to Berlin's needle-like TV tower by 2017. Designed by the US architect Frank Gehryand paid for by US real estate firm Hines, the 150-metre (492ft) building on Alexanderplatz will have 39 floors, with about 300 apartments, restaurants, a hotel and a spa.

The large square in the former eastern sector of the German capital is surrounded by Soviet-era shopping malls, multilane roads and train tracks. Up to 20 more buildings are scheduled or under construction.

Nonetheless, the city senate's building director, Regula Lüscher, welcomed the plans for "an extremely striking new landmark".

Gehry has been associated with the revitalisation of rundown urban areas through extravagant architectural projects such his ship-like Guggenheim Museum in Bilbao, Spain. Berlin politicians will be hoping for their own equivalent of the "Bilbao effect" to make the square more attractive to residents. Critics say that the area's "suburban feel" is the result of a lack of co-ordinated planning. In 1993, the Berlin architect Hans Kollhoff convinced the senate to build 10 150-metre tall residential towers around Alexanderplatz to give the area a unified look. But the grand plan was torpedoed by landowners who refused to tear down the old GDR-era buildings and preferred to renovate them instead.

A plan for a series of 150-metre tall towers around Alexanderplatz was torpedoed by land owners who refused to tear down the old GDR-era buildings. Photograph: Steiner Steiner/Getty Images

Politicians from the Conservative and Social Democrat parties that run the city government say the go-ahead for Gehry's tower block will lead to the revival of the original master plan. But Kollhoff has criticised the Hines building proposal, describing it as "a mega structure with a huge shopping machine", rather than a place "where people can meet and sit in the sun".

Antje Kapek from Berlin's Green party argued that even though the new building may add to the city's skyline, it would do little to improve life for residents.

"Germany's highest tower block will be visible across the city, but there will be no compensation for its direct environment," she said. "The investor is allowed to build, but the city is getting nothing in return".

Building works on the Hines tower, which is expected to cost €250m (£205m), are set to start in 2015.Alexanderplatz was famously the setting of an eponymous Weimar Republic-era novel and a 14-part film series by Rainer Werner Fassbinder. During the winter, the square is home to one of the country's noisier Christmas markets.

> via The Guardian