The tide has turned by the Thames. Time was that the South Bank was as unloved as its brutalist Sixties buildings. But thanks to the Jubilee line extension and Tate Modern, the area has emerged from its concrete cocoon to become a cultural hub.

Companies that would once have sniffily dismissed it made their home there. Upmarket estate agent Knight Frank even added the South Bank to its prime central London index - the first place on the "wrong side" of the river to make the cut. And work began a fortnight ago on western Europe's tallest skyscraper, the Shard of Glass above London Bridge station. Developers hope it will be completed in 2012.

So is it still smooth sailing on the South Bank despite the recession?

"Generally, we're doing well," says Simon Hughes, Liberal Democrat MP for North Southwark & Bermondsey. "Tourism is one of our greatest money-earners and because of the weak pound, London is a great place to visit at the moment."

The South Bank is a big draw for these currency-conscious travellers. Tate Modern is now the UK's third-most popular tourist attraction and more than 3.5 million people ride the London Eye each year. Even on the gloomiest day in early April, queues for the wheel were long. Local traders - even the ice cream man - said business was good.

But are companies still tempted to cross the river? The area has been hard hit by past recessions, but Tim Plumbe, a City offices director for property consultancy DTZ, believes this time is different: "Rents have not fallen as sharply as elsewhere because there is very little supply. The trendiness factor helps too."

Prime rents have dropped by a modest fifth in the last year. Vacancy rates - currently around 5% - are about half the London average.

Knight Frank's head of City leasing, William Beardmore-Gray, attributes this relative resilience to its location and transport links: "London Bridge could be considered the centre of the capital now. You're only nine minutes from Canary Wharf and Green Park and just across the water from the City."

Professional and financial services companies make up the bulk of tenants. Accountants PricewaterhouseCoopers will move 6000 staff to the More London development near Tower Bridge by 2010, joining rival Ernst & Young, private-equity group Terra Firma and law firm Norton Rose, which has spoken of the benefits of the Tooley Street site.

"Moving has increased their ability to recruit and retain staff, and clients love going there," says Beardmore-Gray.

Meanwhile, Royal Bank of Scotland is taking 380,000 square feet at Land Securities' Bankside development near Tate Modern, becoming a neighbour to magazines publisher IPC Media.

But it could be the Shard of Glass that will finally kill off the notion that the South Bank is simply a "City spillover" address. DTZ's Plumbe predicts: "The effect of the Shard will be extraordinary -it will put the area on the global map."

Residential developments are also still springing up, with Bankside's 230 apartments among the most prestigious. Flat prices held up remarkably well last year, but have seen a double-digit percentage drop in the past three months. Charles Leigh, a partner at Knight Frank residential development, is optimistic, however: "It is one of the few parts of London which will come out of the downturn with glowing prospects." One of the attractions for flat-hunters is its status as London's second luvvie land, home to the National Theatre, the Globe, the Menier Chocolate Factory and the Vics Old and New. Many locals can walk to work and enjoy being close to Borough Market's delicacies.

And how is the gluttons' paradise faring? Are London's gastronomes shunning Borough's stalls for - God save us - the supermarket? The farmers' market that launched a thousand rivals is still heaving at weekends, but some traders say the foodies are being replaced by overseas visitors.

"Borough has almost become a victim of its own success," says David Wilson, the manager of fishmonger Applebee's. "It's full of tourists but the number of people actually carrying bags is shrinking." Applebee's sales have not suffered, but Wilson believes they are helped by being away from the throng.

The market is wisely responding to the flood of tourists. Cakemaker Konditor & Cook will start selling cream teas in its Borough shop after requests for the "English experience".

Its most famous buildings may resemble car parks, complete with skateboarders and graffiti, but the South Bank remains one of the capital's bright spots. It seems Ray Davies of the Kinks was right when he sang: "As long as I gaze on Waterloo Sunset, I am in paradise."

Vital statistics

Prime office rents (per sq ft)
2000: £53*
2007: £47.50
Now: £37.50

Two-bedroom flat:
2000: £230,000
2007: £382,000
Now: £350,000

Top businesses by sector:
Charities and charitable organisations: 158
Architects: 109
Public houses: 91
Employment and recruitment: 89
Restaurants: 65
Number of businesses: 3677
Average length of trading: 18 years

* Big pre-lets in More London
Sources: King Sturge; 192.com, business and residential directory website

Baking with flair

Gerhard Jenne owns Konditor & Cook, the bakery adored by the cake cognoscenti. Jenne, 49, is a master pastry chef who worked at the Justin de Blank bakery before opening his shop on the South Bank 15 years ago. Konditor & Cook now has four more stores across London, including the one in Borough Market. They make all their cakes on site.

“Our arrival was a bit of a catalyst, bringing some West End flair to the South Bank,” says Jenne. “When we came here, it was a land of greasy spoons' and takeaways, but others soon joined. Everyone thought it was going to fall into the Jubilee line extension but the London Tourist Board had a master plan to revive the area.

“Sales are holding up. We are seen as an affordable luxury. We're not a cheap shop, because of the quality of the cakes and the ingredients, but customers think our prices are fair. You have to work a bit harder at times like these. We've made more effort with seasonal products, for Mothering Sunday and Easter. Service is also important. A customer said recently it was nice to find a shop in London where the staff still smile.”

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