Welcome to Manhattan-on-the-Mersey

Liverpool's successful bid to become European Capital of Culture in 2008 will bring massive investment and 14,000 new jobs. If you want to buy before prices escalate, now is the time to explore. Rosalind Russell looks at what is on offer

When somebody describes Liverpool as "the new Paris", a sardonic Gallic smile may permitted at this heroic attempt to talk up a gritty northern city which still has some way to go in the Rue du Faubourg St- Honoré handbag stakes. But then Tatler devoted 22 pages to the cool regeneration of the old girl earlier this year. That was followed by the city's successful bid - against stiff competition - to be European Capital of Culture 2008, bankrolled by the Duke of Westminster's company, Grosvenor & Henderson, to the tune of £750m.

When somebody describes Liverpool as "the new Paris", a sardonic Gallic smile may permitted at this heroic attempt to talk up a gritty northern city which still has some way to go in the Rue du Faubourg St- Honoré handbag stakes. But then Tatler devoted 22 pages to the cool regeneration of the old girl earlier this year. That was followed by the city's successful bid - against stiff competition - to be European Capital of Culture 2008, bankrolled by the Duke of Westminster's company, Grosvenor & Henderson, to the tune of £750m.

People like Digby Jones, director-general of the CBI, were quoted as saying: "Liverpool is a city whose time has come." Suddenly, people are beginning to talk about Manhattan-on-the-Mersey.

It's a little premature, perhaps. As yet, any resemblance to the chic concrete canyons of New York City is only apparent in the number of former commercial buildings being converted into loft-style apartments and a working waterfront. But the race is onm with developers scrabbling to be the first to sell the city's first £1m penthouse.

The smart money is on Dublin-based Pierse Homes which has developed The Tower Building, a Grade II* listed Edwardian landmark on Water Street. A threestorey penthouse above the parapet, its interior design and specification has been kept secret to stoke up interest. It is currently being finished, crowning the first phase of 54 flats which have all been sold. Twelve apartments were sold by agents Knight Frank on the night of the launch, helped - purely coincidentally - by an obliging display of nature.

"People began to arrive between six and seven o'clock," says KF sales manager Chris Neill. "They got there just as the sun was setting behind the Liver Building on the Mersey and it looked absolutely magnificent. The majority of the people who bought that night bought on that side of the building, and unusually, most were going to be owner occupiers, rather than investors."

People who bought early - prices started at around £120,000 - and have since sold have turned round a quick and very gratifying profit. Those who have hung on will probably do even better.

"There have been false starts in Liverpool," concedes Chris Neill, "but don't underestimate the power of the City of Culture. The knock-on effect should be tremendous. Liverpudlians have got their act together. People looking for the next best thing to Manchester are coming to Liverpool because prices are more accessible, but probably not for long."

The city is expecting £2 billion worth of investment to pour in on the back of the City of Culture award, doing for Merseyside what it did for Glasgow, and creating 14,000 new jobs. So far, Liverpool has lagged behind cities like Birmingham and Manchester, but the regeneration plans are well advanced for a swift catch-up.

Five years ago, less than 3,000 people lived in the city centre. Now there are more than 10,000 and that figure is set to double during the next four years according to demographic experts. The Ropewalks area, from Duke Street to Bold Street is developing as a Bohemian, younger, hipper area where property prices are cheaper than the landmark blocks. It's home to Europe's oldest Chinatown, the area colonised by the Chinese seamen who passed through the busy port in the 19th century.

The Tate Gallery at the Albert Docks adds gravitas to Liverpool's claim to be a promoter of the arts. And the chic Simply Heathcotes - all glass, granite and cherrywood finish - is the place to eat and be seen. Liverpool FC celebrated their treble winning season there. A budding film industry already employs 1,300 people and the Liverpool Film Studios opened last year.

They might have renamed the airport John Lennon Airport, but in reality the city doesn't have to rely on its once famous export, The Beatles, as its only claim to fame.

Urban Splash were among the first developers to see the potential, taking over a former school which had been damaged by two major fires, and turning it into an award-winning apartment block. The Collegiate is Grade II* listed and was designed by Harvey Lonsdale-Elms who also designed St George's Hall. The apartments have been created around the massive windows and enjoy a walled garden.

Ian Johnston, a DNA analyst in forensics, had known and loved the building for years and was sorry to see it with its windows broken and vandalised. "I knew about Urban Splash and their reputation from Manchester and I'd heard they were developing the building. I was visiting friends in the area with my girlfriend Joanna, so we took the opportunity to pop in.

"We bought a flat on the second floor, but as they have double-height rooms, it's effectively the second and third. In the evening we look out into the walled garden which is illuminated, which is lovely. It is definitely worth the commute to work to live here."

Only the new penthouse is still for sale at £275,000, including two parking bays and a terrace overlooking the Mersey, although there are several re-sales available through estate agents City Residential.

At least seven other new tower blocks - including a projected 29-storey Beetham Tower - are due to be built during the next five years, raising the skyline and the profile of Liverpool to something a little closer to Manhattan. It can only be a matter of time before fashion follows. Are you listening, Harvey Nichols?

Urban Splash penthouse, 07000 37 37 37

For the Tower Building, 0151 236 9007

City Residential, 0151 231 6100.