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The allotment, in suburb of Seelze, is an hour's drive from the town of Braunschweig, the last fixed abode of Christian B., whom prosecutors last month named as their main suspect in the 3-year-old's presumed murder.
The Daily Telegraph is reporting that witnesses saw German federal investigators lift off a cement block covering the basement at the council-owned site.
Sniffer dogs were reportedly led into the underground cellar.
Earlier, a spokeswoman for Braunschweig prosecutors, who have jurisdiction over the case, confirmed the search was linked to the McCann case.
McCann's disappearance, from her bedroom in a rented holiday home in the Algarve, sparked one of Europe's biggest international investigations. Last month, prosecutors announced they had phone evidence linking B., a rapist with convictions for abusing children, to her disappearance on May 3, 2007.
Under German law, police have not released the suspect’s surname and media in Germany are not permitted to report it, although it has appeared in some British outlets.
Earlier searches in the case have focused on an abandoned industrial site in eastern Germany that was owned by B., who is currently serving a prison sentence for drug dealing.
Prosecutors are also investigating whether B. might be connected to the disappearance of at least one other young child in Germany.
- additional reporting by Reuters