Polish investors revive east German town

By Kerstin Gehmlich

LOECKNITZ, Germany (Reuters) - For years, Germans from the town of Loecknitz drove across the Polish border to buy cheap cigarettes and alcohol. Today, Poles like Marcin Baryliszyn go the opposite way to set up firms and build homes.

Baryliszyn is one of several dozen Polish entrepreneurs who have set up in Loecknitz, providing a boost to the 3,000-strong town near the border in one of Germany's poorest regions.

"It's quite astonishing. A few years ago, people said once Poland joined the European Union, Germans would rush to Poland to buy everything up. But it turned out quite differently," Baryliszyn said. "Cheap property is a key factor."

At first glance, Loecknitz looks like many other East German towns: almost one in four people is unemployed, discount shops line its streets and the far-right National Democratic Party (NPD) scored 18 percent in a recent election.

But unlike many bleak towns in the former communist East, where birth rates have slumped and apartments stand empty because jobless workers have moved to wealthier western states, dozens of brightly painted family homes have mushroomed in Loecknitz and it now needs a bigger kindergarten.

Like Baryliszyn, many investors and Polish buyers come from the booming port city of Szczecin, Poland's seventh largest city, which is less than a 30-minute drive away from Loecknitz.

Since May 2004, when Poland became the biggest ex-communist European Union member, the jobless rate in Szczecin has dropped from above 16 percent to 6.6 percent in January 2008 -- less than a third of the current rate in Loecknitz.

"Szczecin is our trump card," said Lothar Meistring, the mayor of Loecknitz, where estate agents say property prices are up to 20 percent cheaper than in the Polish city.