The arrival of the first Eurostar train at St Pancras station on Wednesday will mark the latest chapter in the transformation of the King’s Cross area from a tacky neighbourhood of drug-dealers and prostitutes into a vibrant new district of theatres, restaurants and trendy flats.

Passengers alighting at the landmark station will be treated to Europe’s longest champagne bar, luxury boutiques and a daily farmers’ market under the towering gothic arches. The Victorian architecture and engineering have been given a contemporary revamp, making for an impressive terminal to greet the shiny high-speed trains arriving from Paris in just 2 hours 15 minutes and Brussels in less than two hours.

Yet the rebirth of the grand, if faded, Midland Railway terminal as St Pancras International is only a tiny part of the regeneration of this part of north London. Countless buildings are covered in scaffolding, with giant cranes towering over the works. Builders in hard hats and high-visibility jackets often outnumber the tourists and travellers.

Various residential projects are under way. The first due for completion, in 2009, is St Pancras Chambers. This is the former Midland Grand hotel, a Grade I-listed building at the front of St Pancras station, which is being converted by the Manhattan Loft Corporation into 67 flats and a five-star, 244-bedroom hotel.

All the flats – with the exception of the penthouse – were sold off-plan within a few months of going on the market in 2005, and many have changed hands at escalating prices since. Arlington Estates, for example, has a two-bedroom, 710 sq ft flat for £999,950, which would have sold for about £610,000 in 2005. The developers waited before putting the 5,640 sq ft penthouse on the market; it is now for sale for £10m.

Impressive though it may be, St Pancras Chambers will be dwarfed by King’s Cross Central, a £2 billion regeneration project by the developer Argent. Over the next 15 years, 67 acres of dirty and disused railway land, mostly to the north of St Pancras and nearby King’s Cross stations, and beyond Regent’s Canal, will be cleaned up to make way for offices, shops, restaurants, a primary school, health centres and almost 2,000 new homes.

The buildings will be laid out along 20 new roads, flowing between squares and parks. Twenty historic buildings will be refurbished, including four listed gas-holder frames, one of which will be incorporated into a new block of flats. The University of the Arts, which includes Central Saint Martins, will relocate from the West End and take up home in the revamped Granary building at the centre of the site.

Although the scheme is still wending its way through the planning process, the first building is expected to be ready for occupation in 2010. The estimated end value of the development is £3.5 billion.

“A development of this scale will transform the area very quickly,” says Adrian Owen, a senior director at Hamptons International, the agent that originally sold the flats at St Pancras Chambers. “About 60m people will be travelling through King’s Cross a year. There has never been anything of quality for them to buy. This changes everything.”

The effects of these changes have already had a considerable impact on existing properties in the surrounding streets. “The changes have put King’s Cross back on the map,” says Andrew Sorene, director at Frank Harris estate agents, which sells mainly to investors, young professionals and commuters wanting a pied-à-terre in London. “In the past year, prices have risen by up to 25%.”

Sorene believes the area immediately south of St Pancras station has the greatest potential for further price growth. “Bloomsbury has attracted a lot of interest in the past year, and the pocket between Euston Road and Russell Square has seen a marked increase in prices lately,” he says.

The area offers a mix of council flats, run-down artisan mansion blocks and converted Victorian houses that have seen better days. Unlike the vast swathes of brownfield land to the north of King’s Cross, it has little potential for new development; there are, however, opportunities for small-scale refurbishment. Frank Harris, for example, is selling a peculiar one-bedroom flat spread over the ground floor and basement of a Victorian building for £325,000. Although tiny, it is just five-minute walk from St Pancras.

There are more opportunities off York Way, the eastern boundary of King’s Cross Central. Here you will find Regent Quarter and a raft of other smaller developments among 1970s council blocks and a smattering of period property. A one-bedroom flat in a converted Victorian house on tree-lined Balfe Street is for sale with Saffron for £400,000. Also off York Way is King’s Quarter, where Arlington Estates is selling a one-bed flat off-plan for £335,000.

Given the broader slowdown in the market, agents do not expect prices to continue rising at quite the same pace. Yet, just two miles north of Oxford Street, King’s Cross is the last bit of central London to be gentrified. Those ready to take the long view are likely to be rewarded for years after the fanfare over the trains has died down.

Argent: www.argentgroup.plc.uk. Arlington Estates: 020 7704 1090. Frank Harris: 020 7405 4444. Manhattan Loft Corporation: www.manhattanloft.co.uk. Saffron: 020 7424 9774

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