The City and Clerkenwell join London’s 'hot and posh' postcode list

The City of London and Clerkenwell have just joined the property rich list of prime central London locations. Once fringe areas, they have been on the fast track for 10 years and have now become sought-after addresses good enough for upmarket estate agents to add them to their "hot and posh" spots to join long-established Mayfair, Knightsbridge, Belgravia and St John's Wood.

THE SQUARE MILE CLUB

The capital's main business district has always had residents but now it is one of London's top residential addresses, according to research by Knight Frank.

The reason is the City's gradual transformation from a dull, pin- stripe, nine-to-five office district to a buzzing neighbourhood, with quality retail, fashion boutiques, Michelin restaurants, highly rated schools, swish new apartments and a lively "scene" that stretches well into the evening. Residential prices in the City have jumped 122 per cent in a decade, outperforming traditional prime areas.

Tight supply means City homes make sound investments. In the past, corporation planners were unenthusiastic about residential development, especially in the core banking area — why build homes when you can squeeze in another rent-generating office building?

And why build houses when you want to be known as a world-class dynamic financial centre, not as a property producer for pram pushers? But this line has been relaxed and the residential population has risen from 4,500 in 1985 to 11,000 today — and continues to grow, even though new homes will still play second fiddle to new offices and shops.

FROM STONE WALLS TO A RING OF STEEL

Living within the City's ancient walls used to boil down to a Barbican apartment or a crashpad in an outdated office conversion. Today's busy bankers can buy a home at a glamorous scheme with statement architecture, like The Heron, a 36-storey black glass tower with 285 apartments due for completion in 2013. Prices from £495,000 to £5.25 million. Call 0845 533 8000.

The (famously in control) Peter Rees, the City's chief planner, says there is capacity for another 2,000 or so homes, most of which are likely to come as small-scale redevelopments rather than new high-rise buildings in the core banking area.

The City has a reputation as a troublefree, clean and safe place to live. There is even a low-profile, but reassuring, "ring of steel" — police sentry points at various access roads — a modern version of the perimeter wall and gates of a medieval city.

And the City offers value. Residential property is still priced quite a bit lower than the best addresses in Westminster borough or Kensington and Chelsea. Prices at The Heron, the City's most expensive address, equate to about £1,500 a square foot. But lower-priced homes are typically from about £400,000 for a small pied-à-terre.

Estate agents report that an increasing number of buyers are looking for a wow factor main home in the City.

Tapestry, a Georgian warehouse built by the East India Company to store precious goods such as Oriental rugs, has been turned into 14 apartments that mix contemporary finishes — ash floors and doors, glass walls — with the building's listed fabric of vaulted timber ceilings, cast-iron columns, exposed brick and cargo doors.

They are big, loft-like spaces ranging from 1,400sq ft to 3,500sq ft. Prices are from £1.4 million. Call Savills on 020 7016 3865.

The address is New Street, a pedestrianised lane moments from Liverpool Street station that leads into Devonshire Square, an attractive courtyard office and retail complex. This is the eastern edge of the Square Mile, bordering colourful and vibrant Shoreditch.

OH, WHAT A SURPRISE

The City-fringe area of Clerkenwell offers the biggest surprises. It is a real, "Who would have thought it" location but it has grown into a sophisticated, worldfamous centre for creatives, in fact the largest media hub in Europe.

It has also become a cachet address, synonymous with loft living, where Harry Handelsman launched his first loft conversions in buildings echoing its industrial past.

New schemes include Central Square — prices from £435,000, call 0845 177 1711 — and Bezier, which looms over Old Street roundabout. Prices from £425,000. Call 020 7490 1603.

CO-OPERATION IS KEY

Aldgate is another emerging City-fringe neighbourhood. Historic Goodman's Fields, which includes the Victorian former HQ of the Co-operative and Wholesale Society, is being redeveloped by Berkeley Homes. Prices from £720,000, call 020 3217 1000. Coming soon is a 27-storey tower with 235 homes on Alie Street.