To observers of global finance, the recent ranking of London as the world's second most expensive city hasn't exactly been a shock. Anyone—whether American or English—with a pound in his pocket knows that nothing in the British capital comes cheap. And why should it? Economic "vigor" has its upside, and London these days is in the midst of a style boom. "The city has never looked so exciting. It has energy," says Anthony Lassman, art collector and publisher of the Nota Bene travel books (www.nbreview.com). Lassman is referring particularly to the contemporary art scene, to which he devotes an expanded chapter in his second NB guide to London, to be released next month. "There's money here, the economy is up, and it's fueling artists." Enter Larry Gagosian, the New York art dealer, who in May opened a mammoth new gallery in the King's Cross neighborhood. (It was designed by Caruso St. John, who's also responsible for the New Art Gallery in Walsall, considered one of the most important examples of modern British architecture in recent years.) The Gagosian is a major arrival; the Financial Times declared it "perhaps the world's most influential private gallery. [It] both confirms London's status as the heart of the European art market and Caruso St. John's position as among the most skillful of architects currently at work in London." Gagosian's ribbon-cutting eclipsed, that same week, the horror of a warehouse fire that destroyed more than a hundred pieces of Charles Saatchi's Britart collection. There's no shortage of new work with which to replenish his stock, though: The gallery Hauser & Wirth, based in Zurich, recently opened on Piccadilly, and from October 15 to 18 London's second Frieze Art Fair will bring together 140 contemporary galleries from Moscow to Los Angeles in Regent's Park.

Paintings are not, of course, the only things to buy in London. But it's a recent development that shopping—despite the city's lackluster fashion week, which still fails to attract the heavy hitters—has risen to the level of art. At a sizeable 20,000 square feet, Asprey's just-opened flagship store at 167 New Bond Street, designed by Norman Foster with David Mlinaric interiors, is one of the largest luxury-goods stores in the world. And Burberry has added yet more to the empire: a new über-British accessories collection that includes a silver charm bracelet from which dangle Big Ben and a double-decker bus ($600). The former newcomers are putting down roots, too. Matthew Williamson has opened his first shop at 28 Bruton Street, next door to an adorable new Stella McCartney boutique. And Alexander McQueen, who once made a skirt out of mussel shells, has introduced a men's line that will be tailored to fit, according to Savile Row standards, at his Old Bond Street store.

It seems the English can't escape tradition—which must be why they're so good at turning it on its head. Among London's "tea set," floral china is rapidly being replaced by something hipper. At the Berkeley Hotel's Caramel Room, Knightsbridge ladies sip from Paul Smith-inspired crockery, picking at Missoni-striped éclairs, slices of chocolate masquerading as Fendi baguettes, and cookies cut and iced to match the dress du jour (this fall, look for tweed and tartan icings and a "Jimmy Choo" biscuit). At Parlour in Sketch, Conduit Street's ineffably cool three-story tearoom, bar, brasserie, gallery, and Pierre Gagnaire restaurant, white tea has nudged Earl Grey off the menu. Even the scone with clotted cream, while taken to new levels in the Viennese-style tearoom of The Wolseley, faces competition from the Cardinal cake, Sketch's black currant macaroon with black currant marmalade and violet mousseline cream (too pretty to eat, which is just as well for Sketch's wafer-thin clientele).

At Yauatcha—opened in Soho by Alan Yau, who grabbed Britain's first Michelin star for Chinese cooking at London's Hakkasan—the crowd quaffs Taiwanese oolong and Silver Tips Darjeeling while nibbling sweets that look like sculpture (anise cream cake and a dark, velveteen bombe of chocolate loaded with cinnamon, crème brûlée, and raisin sponge cake). They alone would be enough to stare at, even without Yauatcha's interiors by Christian Liagre, uniforms by Tim Yip (who won an Oscar for art direction in Crouching Tiger, Hidden Dragon), and the Richard Rogers-designed building itself. Serving far more than cutting-edge crumpets, Yauatcha is one of the most hyped new restaurants this year. It's worth it, particularly the scallop shumai and a politically incorrect shark's fin consommé downstairs at the dim sum bar.

Another hot spot is Cipriani London, where Elton John has already laid claim to a regular table. (To be treated like Sir Elton, you'll want to get to know the manager, Marco Boito. He'll make sure you have a lovely time over Bellinis and impeccable Italian classics like homemade tagliolini with veal ragù.)

Heading east to the edgier enclave of Clerkenwell, British supermarket heir Mark Sainsbury has just opened a hotel, The Zetter. The 59 slick, colorful rooms are nice enough (and well priced at about $230 a double), but it's the Zetter's modern Italian restaurant that has caught the attention of fashionable Londoners. It serves simple but exceptional dishes like Tuscan steak, gnocchi, and grilled mushrooms—for breakfast! It's sure to hog the spotlight at least until November, when Michelin three-star chefs Jacques and Laurent Pourcel open W'Sens, their gastronomic shrine in Waterloo Place.

The fall will bring more openings, not the least of which is actor and director Kevin Spacey's first season at the helm of the Old Vic, the city's most vital theater. The man himself will tread the boards in February, in Dennis McIntyre's National Anthems. In December, Ian McKellen will appear as Widow Twanky in Aladdin. Quirky but utterly charming: That's London in full swing.


Gagosian Gallery At 6-24 Britannia St.; 44-207/841-9960

Hauser & Wirth At 196A Piccadilly; 44-207/287-2300

Frieze Art Fair At Regent's Park; 44-207/025-3970; www.friezeartfair.com

Asprey At 167 New Bond St.; 44-207/493-6767

Burberry At 21-23 New Bond St.; 44-207/839-5222

Matthew Williamson At 28 Bruton St.; 44-207/629-6200

Stella McCartney At 30 Bruton St.; 44-207/518-3100

Alexander McQueen At 4-5 Old Bond St.; 44-207/355-0088

The Berkeley Rates, $500-$6,000, and tea, $46 per person; Wilton Pl.; 44-207/235-6000

Sketch Tea, $30 per person; 9 Conduit St.; 44-870/777-4488

The Wolseley Tea, $30 per person; 160 Piccadilly; 44-207/499-6996

Yauatcha Dinner, $95; 15 Broadwick St.; 44-207/494-8888

Cipriani London Lunch, $130; 25 Davies St.; 44-207/399-0500

The Zetter Restaurant & Rooms Rates, $230-$565, and dinner, $110; 86-88 Clerkenwell Rd.; 44-207/324-4444; www.thezetter.com

The Old Vic At The Cut, Waterloo; 44-870/060-6628


A GREAT FRY-UP Our choice for a traditional English breakfast is at Inn the Park ($40; 44-207/451-9999), the latest from Oliver Peyton. Take a terrace perch looking out on St. James's Park.

THE ROOM TO GET The Oscar Wilde Suite (the playwright was arrested here) at The Cadogan ($650; 75 Sloane St.; 44-207/235-7141), which was recently redone by Grace Leo-Andrieu. Room 405 at the new Baglioni Hotel, with an open fire in the sitting room and views of Kensington Palace ($1,600; 60 Hyde Park Gate; 44-207/368-5700). The Zetter's rooms 503 and 505, both with private terraces ($565; 86-88 Clerkenwell Rd.; 44-207/324-4444).

SPA CENTRAL Four treatment rooms open this fall at Heidi Klein's new London flagship spa (257 Pavillion Rd.; 44-207/259-9418). The 60-second Mist-On Tanning ($50) is the best of a smart menu. And one of our favorite hotels, The Lanesborough, just opened a spa offering La Prairie treatments ($100-$360; Hyde Park Corner; 44-207/259-5599).

Hotel prices show high-season rates from the least expensive double to the most expensive suite. Restaurant prices reflect a three-course dinner for two, excluding beverages and gratuity.