The East End: London's hottest neighbourhood

Redchurch Street in Shoreditch is one of the capital's most achingly cool roads; Brick Lane is simply buzzing with artistic activity, while Spitalfields manages to mix established names with cutting-edge design. In recent years, the City's eastern fringe has supplanted Notting Hill and Camden as London's hippest neighbourhood.

Terence Conran's Boundary Street restaurant, café and hotel and the opening in the spring of the boutique Town Hall Hotel featuring Viajante, Portuguese chef Nuno Mendes's talked-about new restaurant, have secured the East End's reputation as the capital's hottest neighbourhood.

But if you look closer there is still a significant corner of this burgeoning area that waits to be discovered. It is even more surprising, then, to find that this secret location is only a stone's throw away from Liverpool Street station and the City. In fact, walking around, there are vistas of the Gherkin at the end of almost every street.

An arty affair

Sandwiched between Bishopsgate to the west, Aldgate to the south and Commercial Street to the east, this was once the heart of the East End's rag trade, and even today, when weekend crowds have moved over to Spitalfields and Brick Lane, the market along Middlesex Street and Wentworth Street, which Londoners all know as Petticoat Lane, still survives.

If you can judge an area to be on the cusp of change by the number of interesting newcomers who are moving in, then this historic E1 enclave is one to watch. Later this year, artist Tracey Emin opens her new £4 million gallery and studio in an old weaving shop in White's Row.

Meanwhile, David Cameron's favourite street artist, Ben Eines - the Prime Minister gave President Barack Obama one of his paintings when he visited Washington in July - has spent two years painting his trademark alphabet letters - all 26 of them - along the shutters on Middlesex Street, transforming Petticoat Lane at night from a grim, litter-strewn thoroughfare into a brightly coloured fairground.

Locals now call it Alphabet Street, and local parents recite the alphabet as they walk their children to school. And the art doesn't end here. Inspirational gallery owner Jessica Tibbles, from Electric Blue Gallery in Middlesex Street, has persuaded street artists from London and France to paint the shutters in 11 surrounding streets. More than 300 shutters are being transformed to create a unique outdoor gallery covering one and a half miles of street.

Fashionable corners

With all this creative energy bubbling around, it is perhaps not surprising that a smattering of the old greasy spoons and cheap clothing shops are closing and finding a new generation of café and bar owners to take their place. Stop off for coffee supplies and a quick cup at Battista Antonio in Leyden Street, or a Mexican burrito at the Flying Burrito in Middlesex Street, or a lomito, an overfilled Argentinian steak sandwich, at Moo on Cobb Street, and round it off with a pint at the revamped Bell in Middlesex Street.

Compared with the more fashionable corners of the East End, the streets around Middlesex Street are relatively affordable. According to James Walker-Osborn, at estate agent Stirling Ackroyd, it's significantly cheaper in this little enclave than further north around Spitalfields Market and Shoreditch. He says: "Prices in these now almost prime areas can approach £1,000 a square foot, whereas around Middlesex Street prices are half that."

A two-bedroom flat in St Clements House, a recently refurbished Art Deco block in Leyden Street, was recently on the market for £495,000. With 807 square feet of space this worked out at £613 a square foot. As old East Enders retire and move into the suburbs or the country, newcomers move in, making this a good place for first-time buyers to look for affordable ex-council flats.

Petticoat Square is a love-it-or-loathe-it Seventies concrete development with low-build blocks, a tower block and a raised piazza. Owned by the Corporation of London it is well-maintained and one-bedroom flats sell for between £230,000 and £250,000, priced at well below £500 a square foot.

There is a student buzz to the area, too. London Metropolitan University has a cluster of buildings around Middlesex Street, and upmarket student accommodation developer Nido has recently opened the doors of a new development in Frying Pan Alley. At 34 storeys, Nido says it is the tallest student accommodation in the world and when it is full next month it will house more than 1,000 students.

These are not flats for impoverished students - rents range from £210 to £330 a week, with these wealthy young people boosting the local economy.