The dilapidated and graffiti-smeared 19th -century theatre looks like an improbable relic from the early days of Fidel Castro’s Cuba. “Your Struggle is Our Struggle,” proclaims a slogan on its front facade. Bedraggled, bearded men in combat jackets and berets camp out in sleeping bags on the front steps, despite the January cold.

“Red Flora”, as Hamburg’s leftist community centre is named, sticks out like a sore thumb in the city’s hip, alternative yet increasingly upmarket Schanzenviertel district. Last week it prompted police to declare the centre of one of Europe’s richest port cities a “danger zone” and caused the US embassy to issue travel warnings to citizens contemplating a visit.

“If stopped without proper identification, persons may be detained by Hamburg police without further justification,” Berlin’s American embassy cautioned last Wednesday. The draconian measures would appear to have turned posh Hamburg and its famous if less smart Reeperbahn red light district into the Teutonic equivalent of Belfast during the Troubles.

Download the new Independent Premium app Sharing the full story, not just the headlines

The entrance to the Reeperbahn’s Davidwache police station was festooned with police barricades last week. Police helicopters circled above the city. Uniformed officers conducted stop-and-search operations. Last Wednesday, police were involved in skirmishes with left-wing protesters who pelted them with fireworks. “Many people who live here are fed up with the violence and destruction,” was how Hamburg’s police trade union president, Joachim Lenders, justified the new measures.

As Germany’s longest surviving squat, Red Flora has become a symbolic last stand against what many on the alternative left fear will be the total gentrification of what is already one of Europe’s richest cities.

Shortly before Christmas plans to evict the squatters were met with a mass counter-demonstration involving militant left-wing and anarchist groups from throughout Germany. The city experienced some of its worst street violence since the Second World War. Masked protesters torched cars and showered police with stones, bottles and fireworks. The police responded with water cannon, baton charges and tear gas. More than 120 police officers and an estimated 500 demonstrators were injured, many of them badly.

Just days later, another group of protesters assaulted police with stones and bottles as they were leaving the Davidwache station in what was apparently an unprovoked attack. One officer suffered a broken nose and jaw. Conservative politicians have since demanded that police be equipped with rubber bullets and Tasers. The police trade union said it did not rule out the qualified use of live ammunition.

Last Thursday, the streets around Red Flora still bore the scars of the so-called “resistance” against growing gentrification. Several shop windows smashed in the pre-Christmas street battles were taped over and still unrepaired. The protesters had deliberately targeted chains such as H&M and Adidas – which are seen as the unacceptable face of capitalism – for their attacks.

The surrounding area is full of independently owned bars, shops, cafes and cheap restaurants. Their owners see the arrival of foreign or multinational retail outlets as a threat, and many of them sympathise with what Red Flora has come to stand for.

“It is one of the few places left in Hamburg where the rule of money is not absolute,” said Dirk, the manager of a record shop selling vintage vinyl opposite the squat. He declined to reveal his surname. “Gentrification is pushing the rents up all the time. Even the local discount supermarket is being driven out. We fear we may be next. We’ll no doubt be replaced by some faceless chain store,” he said.

Plans announced by the owner of Red Flora to evict the squatters from the building and turn it into a “community centre for all” were the spark that ignited mass protests and the subsequent violence.

Manfred Murck, the head of Hamburg’s state intelligence service, says the city is home to some 1,200 left-wing extremists, of which 620 are prone to violence. However, protests against the plans to shut down Red Flora attracted many of the estimated 6,000 other extremist leftists in Germany, and scores of sympathisers. “Red Flora has turned into a symbol of many grievances,” Mr Murck told Hamburg’s Morgenpost newspaper. “Many came here thinking they had a right to destroy things.”

The row over Red Flora now dominates Hamburg politics. The city’s opposition Left and Green parties say the decision to declare parts of the city a danger zone is an unnecessary overreaction on the part of the Social Democrats.

But at Red Flora the mood remains upbeat despite its position at the centre of Hamburg’s “danger zone.” Dave, a man in his twenties who described himself as a community activist, said the publicity of recent weeks appeared to have halted the eviction plans: “We are going to make Red Flora pay for itself. We are going to renovate it ourselves. There will even be a coffee shop and a bar,” he told The Independent.