Katerholzig is something of a surreal, giant adults' playground that enthusiasts say incarnates Berlin's shabby-chic allure and free spirit.

"It's really hip and stylish, a reflection of Berlin," said Victoria Schneider, a young German journalist from Cologne who was taking in the highlights of Berlin for the weekend.

By day, revellers can sun themselves on a vast terrace looking over the river that is lit up in warm and flashy colours from the graffiti-covered lamps as dusk settles.

Or they can sweat off the alcohol from the night before in a sauna in a converted car, and get a massage.

By night, and if they manage to get past the stern doorman, they can warm themselves by the bonfire on the riverside, take to the dancefloor in a cabin-like structure, or head to a bar playing thumping techno.

And there's not an evening that goes by without an alternative theatrical performance such as a circus show or mind-reading event, or live music production diverging largely from the usual club mix such as the Indian Indie night.

Climb the concrete staircase of the former factory, and on the top floor you find the Katerschmaus - a high end restaurant with unconventional flair.

The open-kitchen styled restaurant is decked with avant-garde art pieces all of which spell out rebellion, and the staff sport unusual hats, bright tights, and tattooed arms.

For many Berliners, such as Katerholzig regular Bettina Ritter, the locale evokes the freedom characterizing her city, which is dotted with squats and arts centres in alternative locations such as former water towers, swimming pools and factories like this.

"The unfinished, temporary structural composition also adds to the mystique of the place," said Ritter. "It is very much Berlin because on one end it is run down, and on the other end it has the refined Katerschmaus restaurant."

"The whole idea is brilliant and some very clever marketing obviously went in to it," she said, acknowledging the Katerholzig was now a money-making machine as well as an alternative hot spot.

But the contrast between the graffiti-splattered walls and the pricey menu is not to everyone's taste.

"The graffiti makes it out to be a place for young artists who don't have much money," said Cologne-native Schneider, admitting however that the menu seemed over-priced.

"It reminded me of ripped jeans which ... set you back 300 euros."

(Reporting by Jane Mwangi, editing by Paul Casciato)

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