The area, which extends north from Oxford Street to Marylebone Road, and from Edgware Road in the West to Great Portland Street in the East, is now part of Knight Frank's Prime Central London Index.
It also includes the area around Dorset Square and Marylebone railway station, just to the north of Marylebone Road, the Georgian Portman Estate, world-class cultural attractions such as the Wallace Collection and Wigmore Hall, and the restaurants and retail facilities of Marylebone High Street.
The upgrading of the area to prime is partly the result of the retail-led regeneration policy pursued by the Howard de Walden Estate on and around the High Street, Knight Frank said.
'It has gradually created an exciting mix of upmarket independent shops, with a particular emphasis on fashion and food, which has helped draw in affluent residents. A number of London's most acclaimed restaurants are also nearby,' said Liam Bailey, Knight Frank's head of residential research.
'It has also been driven by location with Mayfair to the south seeing astonishing growth in demand values, it is unsurprising that this boom has expanded north of Oxford Street. Meanwhile, major regeneration projects in Paddington, Euston and King's Cross are improving the fortunes of Marylebone's neighbours to the north, east and west,' he added.
A shortage of property for sale has driven up prices. Some locations, notably around Bryanston and Montagu Squares, are now regularly fetching over £1,400 per sq ft. Last year, few homes broke the £1,000 per sq ft barrier.
'The constraints on development and ownership in the area should ensure that prices remain resilient through the downturn, and are well-positioned for sharp growth when health returns to the market. The best properties are unlikely to lose value, given the ongoing demand for prime accommodation,' he continued.
There is an abundance of rental stock in the area and values are expected to continue to grow, in common with much of the rest of Central London. Growth of over 5% is predicted throughout the capital during 2008, boosting investment yields.
Transport links, particularly via the Jubliee Line to Canary Wharf and the City, will ensure that its popularity with high-earning professionals will continue. The area also sees strong demand from wealthier international students at the various business schools.
