What's the plan?

Nine elms is a triangular wasteland bounded by the Thames, a railway line and London's nastiest traffic interchange, encompassing a disused power station, a wholesale fruit and vegetable market, a sewage-pumping station and a waste dump. It is also, according to the city's mayor, Boris Johnson, "possibly the most important regeneration story in London and in the UK over the next 20 years". For, after many years of Dickensian decay, the earth-movers are chewing up the soil, the cushions have been plumped in the show-flats, and the last unkempt riparian stretch of central London is acquiring the rows of glassy apartment blocks that line urban waterfronts all over the world.

Unusually, Mr Johnson is not guilty of hyperbole. The last time so large and so central an area of London was redeveloped was after the Great Fire in 1666. At 195 hectares, the site is bigger than Hyde Park, and spans a mile and a half of riverbank. The World Trade Centre site, in New York, is barely seven hectares. Across the river to the west is Chelsea, one of London's most expensive areas; to the north is the Palace of Westminster.

The development will not just transform central London. It will also illustrate some of the flaws in the way the city is run.

Several elements came together to make the development happen. One is the inflow of foreign money, which has pushed up residential property prices—London is now the second-most expensive city in the world—and is financing most of Nine Elms. In 2008 the American government announced that it would move its embassy to the site. Ballymore, an Irish company, also has a large site there. Last year two companies part-owned by Malaysia's state-backed investment fund bought the power station and the land surrounding it from NAMA, the Irish "bad bank", which had taken it over from a bankrupt Irish company, Treasury Holdings. (Ballymore also owes £692m—$1.07 billion—to NAMA.)

A second element was a change in the local-government financing rules. In the past, local authorities had little interest in encouraging development, and a lot in pandering to the nimbyism of residents. Now they get more of the increase in the tax take. Wandsworth and Lambeth, the two councils involved, have been pushing the development enthusiastically.

A third is the Tube. The area is poorly served by public transport, and for years the government refused to pay to improve it. But last year a deal was done along lines novel in Britain but common in America. The government will lend £1 billion to help finance an extension of the Northern Line, which will then link the area to both the West End and the City. The money will in time be paid back through a slice of the business rates.

Tony Travers, head of the Greater London Group at the London School of Economics, calls Nine Elms a symptom of the "Hong Kongification" of the city. London has a fast-growing population but also a tight "green belt" which stops it from sprawling. If it cannot go out, it must go up. Nine Elms is therefore going to be three times as dense as London as a whole—jam-packed with tall apartment blocks, with a cluster of towers at its eastern end.

In the past, towers have mostly been confined to the City and Canary Wharf, London's business districts. Wealthy residential areas have resisted them. But the combination of high demand for property, a hunger for development in poor areas and a series of ministers and mayors more interested in promoting growth than in the city's skyline have led to much tower-building along the south bank of the Thames. "There will be a wall of glass from Bermondsey to Battersea," says Sir Simon Jenkins, chairman of the National Trust, a conservation outfit. "If you go to Rome or Paris you don't see this. It's the only major city where the tall buildings policy is anarchic and corrupt"—meaning not that individuals steal money, but that these days the planning authorities have an incentive to approve tower-building irrespective of its impact on the city.

London's development has always been anarchic. Whereas most great cities are based on grand plans, London has grown incrementally and chaotically. Even after the Great Fire, landowners ignored Christopher Wren's elegant, orderly Versailles-inspired scheme for rebuilding the city and did their own thing.

Over time, the city's organic growth has given it an informal charm. But when a lot of new buildings are going up in one place at once, there is something to be said for a more formal plan. That can happen more easily where there is a single landowner, as at Canary Wharf, than where ownership is fragmented, as at Nine Elms.

Helen Fisher, Nine Elms's programme director, describes the planning framework as "tight-loose". It is, she says, very prescriptive about some things, such as height and sight-lines to the river, while enabling a "creative mix" of designs.

There is certainly a mix. St George Wharf—nominated by Building Design magazine for its Carbuncle Cup, awarded to the country's ugliest buildings—has a skyline with what has been described as a "split-prawn motif". Riverlight, a series of lozenge-shaped blocks by Rogers Stirk Harbour and Partners, has much in common with their architects' monumentally expensive but otherwise unremarkable One Hyde Park in Mayfair, but not with its neighbours in Embassy Gardens (top-heavy rectangular buildings) or Battersea Power Station (curved blocks with irregular layers). The American Embassy, with its spiny outer shell, looks like a hedgehog crossed with a fortress and surrounded by a moat. A linear park snaking through the area makes a valiant attempt to unify it; but getting these disparate buildings to hang together is a lot to ask of a strip of greenery.

Nine Elms will probably work better financially than aesthetically. A part of town that has not entirely shed its industrial heritage (the sewage works and the waste dump will remain, snuggled up beside the swanky new flats) is always a risky investment, but Nine Elms's location is in its favour, as is the continued growth in emerging markets that is driving the London property market. Last month the developers of the power station site put on the market 800 flats that are due to be completed in three years' time. They say 600 sold within a week. Nearly all of the flats in Phase 1 of Embassy Gardens have sold, according to Paul Keogh of Ballymore. That company, which lost £248m in 2011-12, is having its best trading year in three decades. And even if London's property market trembles, as it did in 2008, Nine Elms's new owners have deep pockets.

Most of the purchasers are likely to be foreigners. They prefer newly built blocks to the Victorian terraces that the locals go for; according to Knight Frank, an estate agent, they snapped up two-thirds of the new flats in central London in 2012. If too many of them keep their properties as second homes, visiting only a few times a year, the area may struggle to come to life.

Much will depend on Battersea Power Station. Ruined, vast—its core could fit the whole of St Paul's Cathedral—and protected from demolition by an English Heritage listing, it has been a millstone around the area's neck for four decades. But if, as is promised, it is reborn by 2018 with shops, restaurants and offices as well as flats, it could become a dramatic and stylish focus for an area that will sorely need one.