London's Soho is gentrified as seediness is swept away

London's property wave is swamping the world's oldest profession.

The central Soho district's prostitutes and sex cinemas are being overwhelmed by upscale restaurants, bars, hotels and flats in an echo of Rudy Giuliani's celebrated 1990s transformation of Times Square in New York.

"When I started 30 years ago, there was a long run of peep shows," said Paul Giorgio, 61, who runs a fish-and-chip shop in the area. "Now people come in here and ask me, where's Soho? If you take the sex industry away from here, you take away Soho, but I suppose they've got to if they want to make the money."

Soho is the latest once down-at-the-heel area transformed by the boom. Kings Cross, where Google will build its British headquarters, shed its reputation as a red-light district. Clapton, part of which was known as Murder Mile, is dotted with wine bars and a creperie. A two-bedroom flat in Brixton, scene of race riots in the 1980s, can cost £550,000 (HK$7.25 million).

The property outfit created by Paul Raymond, the founder of the district's first legal strip club, is leading the transformation. Soho Estates Holdings is turning Walker's Court, a 50-metre alley once renowned for its sex shops and adult cinema, into a high-end enclave.

At his death in 2008, Raymond's collection of property in the area had contributed to a fortune that The Sunday Times estimated at £650 million. Nicknamed the King of Soho, he was portrayed in the 2013 movie The Look of Love by Steve Coogan.

Raymond's son-in-law, John James, is now the firm's managing director. In his Soho office, he expressed little patience for any wistfulness for the way things used to be. An association known as the Soho Society objected to the damage that development would do to the neighbourhood's "unique character."

"The public backlash is ill-founded and based in nostalgic, romantic bollocks," James said, adding that the proliferation of sex on television and the internet had accelerated an industry decline that began in the 1980s.

There was no romance in the air on December 4, when almost 20 brothels in Soho were raided and shut by police.

"They bashed down doors, came in in full riot gear and with dogs, handcuffed women to the floor, were telling women they were going to tell family at home, pulled women wearing underwear outside in the street," said Laura, a spokeswoman for the English Collective of Prostitutes, which campaigns for the abolition of prostitution laws.

At the group's Kentish Town office, she declined to give her surname or say if she is a sex worker, citing organisation policy. The sale and purchase of sexual services is legal in Britain; brothels, soliciting and advertising related to prostitution are prohibited.

The Metropolitan Police entered 40 premises in all and made 31 arrests in an operation targeting a stolen-goods ring, they said in a December statement. The police later sought "to close the addresses linked to serious crimes including rape and human trafficking," according to the statement. The police on June 5 declined to comment on whether anybody has been prosecuted for those offences.

Prostitution is big bucks in Britain - though not as big as property. Paid sex contributed about £5.3 billion to gross domestic product in 2009, the first time its value was estimated, about 60 per cent more than BAE Systems, Europe's largest weapons-maker, did the same year. Real-estate transactions worth £6.2 billion were completed, according to data compiled by Investment Property Databank.

Soho Estates' holdings are now worth at least US$800 million, according to James. The company, owned by Raymond's family trusts, had net assets of almost £375 million to the end of March 2013, the latest available, a filing at the company-registration office showed.

It plans to spend £10 million to turn the bar, adult-movie cinema and flats previously used for trysts at Walker's Court into a theatre, restaurant and homes whose prices will start at £450 a week to lease.

James likes the Walker's Court plan so much that Soho Estates plan to move in, with a neon Raymond Revuebar sign on the street providing a backdrop to meetings in the boardroom. The Box, a burlesque nightclub, is being retained; Polpo, the restaurant group created by Russell Norman and Richard Beatty, will open a restaurant at the site.

"It's a wonderful location, part of real Soho: seedy, colourful and hidden," Norman said. A fan of Soho's "grit and grime," nevertheless "I really don't get on with the crack peddlers on Rupert Street. And if a little gentrification can improve the area in this respect then I support it."

Soho, also London's main area for gay nightlife, started out very differently. It was made a royal park in 1536 by King Henry VIII and its name derives from a hunting cry. Developed as homes for the aristocracy in the 17th century, it stretches from Oxford Street to Shaftesbury Avenue. By the 1800s, it was known for its poverty after the affluent moved to neighbourhoods like Mayfair. In the 1960s, it became part of the Swinging London scene that grew out of Carnaby Street.

It has been home to Karl Marx and Mozart. John Logie Baird developed what became the television in a flat there. There is also the seedier side: the world's first venereal-disease treatment clinic for men opened there in 1862.

The district's tradition as a red-light district contrasts with new luxury hotels and restaurants with names like Burger & Lobster and Randall & Aubin, which serves oysters and champagne. London-based Firmdale Hotel's new Ham Yard Hotel serves a cocktail mixing bourbon, absinthe, mint and homemade fig syrup for £12. The Windmill, owned by Soho Estates where more than 100 dancers strip nightly, is across the street.

A flat on Brewer Street, adjacent to Walker's Court, is valued at about £1.4 million, compared with less than £1 million in 2009, property website Zoopla shows. The cost of renting an empty store rose 40 per cent last year, according to broker CBRE. Office-building values have almost tripled in the last five years and rents have doubled.

The Crossrail train line that will link Heathrow Airport to the Canary Wharf financial district also appeals. The station at Tottenham Court Road will be about 200 metres from the Regents Sounds guitar store on Soho's Denmark Street where The Rolling Stones recorded their eponymous first album.

The returns on real estate contrast with the lives of those working in the sex industry. Politicians' "priority hasn't been to ask why women with children in this country are going hungry because of cuts to welfare," said Cari, a spokeswoman for the prostitutes' collective.

For Soho Estates, it is time to move on. "I respect the 50 years of work Paul Raymond did, but that doesn't reflect the next 50 years," James said. "What I've got to do now is look at the property and say: is there a better use for this?"