What you do matters less than where you do it. At least, according to estate agents, government planners and Kirstie and Phil: location is King. However, for artistic communities what they do tends to drastically change where they are. In New York the most sought-after neighbourhoods are former run-down art districts: in the 1990s the expensive apartments and fashion houses moved into Soho and most of the galleries were forced to close down and move out. Art and the economy have more in common than a comparison between a suit-clad economist and a paint-covered artist would have you believe.

Now, after a global recession, the artistic and cultural landscape feels threatened. In New York one gallery after another has closed. In the UK cultural institutions expect to see massive cuts in funding under the new Tory government. So where can art go in difficult times? The artistic spaces of Frise and Gangerviertel in Hamburg offer one possibility.

Founded by 21 art students in 1977, Frise was created out of an abandoned factory. Originally known as Kunstlerhaus Hamburg, the group was helped by their art professor, sculptor Ulrich Rueckriem, who donated his own work to raise funds for the restoration of the factory. Two years later, he was inviting international artists such as Richard Long and German artist Martin Kipperberg to exhibit. Twenty five years later the owner of the building wouldn’t renew their contract and so the artists did the only thing they could: they bought an old hairdressing school. (Frise artist Torsten Bruch points out that the name means curly hair.) In the spirit of renewal, "we just took the letters from friseur institute and put them over our door."

By contrast, the Gangeviertel started life in 2009 as a festival exhibiting between 300 and 500 artists’ work. It now includes twelve houses and amenities on a scale that would be astonishing for any cultural institution, but is especially impressive for one that just celebrated its first anniversary. Sitting in the Gangeviertel food co-operative media artist Fabian Nitschkowski and sculptor Jonas Brandt described what’s currently on offer. "We have three galleries, we have a café, there’s going to be a big club in the basement, there’s theatre production, film production and photographic studios on the top floor." The collective is designed to help artists in both their life and work but most intriguingly, Fabian also refers to "some sort of yoga thing."

There has been an attempt to evict the artists but the city’s desire to promote a creative image undermined it. Fabian recounts that they had such extensive media coverage "all over Germany, in such a short amount of time, that it would have been really bad publicity for the city." In fact the city paid for basic repairs when it was reported that many of the artists were using uninhabitable studios. Fabian strongly feels that the benefits brought about by the artistic community deserve the city’s recognition. Hamburg presents a glossy artistic image and rents have dramatically increased in certain, now desirable, neighbourhoods, and so the artists have responded with "we can’t always feed you and get nothing back."

The structure developed by Frise of individual artistic production, exhibitions by outside artists and studios available for artists from all over the world, has proven to be a successful model. There are now around 16 similar organisations in Hamburg and the balance between city, property owner and artist is crucial. Frise artist Sabine Mohr points to the attempts by the city in the 1990s to establish its own artists houses which "were not founded by artists, not self-organised, so they didn’t work out as well." Hamburg-based artist and curator Michel Chevalier also highlights a "long tradition of art in public spaces" as part of the success of these collective art spaces. A result, he believes, of the high number of conceptual and performance artists such as Marina Abramovic and Joseph Beuys who have taught at the famously open-minded Hamburg Art Academy.

Although these two artist-run organisations were formed within a specific context they provide nourishing food for thought in the debate over how to maintain cultural activities in the face of spiraling real-estate costs and damaging economic fluctuations. As artist Fabien from the Gangeviertel notes, you won’t have a lively inner city in Hamburg if you don’t accept the artists.