South Bank gets smart as prices soar

Knight Frank has named the area "London's first contemporary urban quarter". It is also including the district in its house price index for the most sought-after parts of the capital.

Traditionally, the agency used sales figures from neighbourhoods such as Mayfair, Belgravia and Kensington for the Prime Central London Index. By adding the South Bank, it is going south of the river for the first time.

The area as defined by Knight Frank extends along the Thames from County Hall and Westminster Bridge in the west to Tower Bridge in the east, taking in Shad Thames and Butler's Wharf.

Prices there rose 17.3 per cent in the year to September, although the increase in traditional prime areas north of the river was still bigger at 36.5 per cent.

A Knight Frank spokesman said: "Regeneration in the South Bank has been led by cultural initiatives, with projects on the Royal Festival Hall and National Theatre developments.

"It now includes the rejuvenated Borough Market, Globe Theatre and, most significantly, Tate Modern."

Liam Bailey, head of research at the agency, added: "In the best development, near Tate Modern, prices have been rising by nearly 25 per cent. We believe this will be the super-prime South Bank location. It is helped by the Millennium Bridge, which provides quick access into the City, and, of course, the river views."

He said prices for new developments on the South Bank ranged from £600 to £1,100 per square foot, compared with £2,000 to £3,000 in Knightsbridge. "Our view is this gives this area the potential to substantially outperform central London in terms of price increases," said Mr Bailey.

A Tate Modern spokesman said: "We are delighted the development of our gallery has helped the regeneration of north Southwark and has had such a beneficial effect on the value of property in the surrounding area."

Richard Thomas, Southwark council's executive member for regeneration, said: "We're delighted the area is benefiting from its significant regeneration in recent years. From Canada Water to the Elephant and Castle, we are seeing London's centre of gravity being pulled south of the river."

Notting Hill was the last area to be added to the Knight Frank Prime Central London Index, in the mid-nineties.