Ancient Istanbul grows into a beacon on the Bosporus

ISTANBUL -- Maybe it's the warm glow of the purple floodlights pooling over the outdoor terrace at this former Ottoman Empire housing project. Or the distraction of the bikini-clad blonde tethered by her ankles to a Champagne-bottle-bedecked chandelier. Or merely the mellowness induced by raki mojitos poured by handsome young bartenders.

Whatever the cause, the crowd here looks fabulous.

It's the opening night party of the W Istanbul, and the city's Beautiful People have turned out in force to celebrate the debut of its newest, hippest hostelry.

The hotel is part of the stately Akaretler Row Houses, built by a 19th-century sultan to house his workers. Resurrected from ruin, it now boasts sleek storefronts bearing tony international brands — Marc Jacobs, Jimmy Choo, Alberta Ferretti — along with upscale private residences and, as its centerpiece, the ultra-hip W, the U.S. hotel chain's first European property, where rooms start at about $500 a night.

"Everyone said I was crazy buying in a rundown, devastated area," says developer Serdar Bilgili, smiling as he greets his guests.

In fact, Bilgili's enterprise is hardly the only one in this ancient city that is taking the old and making it new again.

Wallpaper, the magazine that scans the horizon for the Next Big Thing, last year dubbed Istanbul "best city" in a nod to its creative vibrancy and emergence as an "elegant party capital." A spate of hotels is poised to open, including a Four Seasons on Thursday in a splendid 19th-century palace on the Bosporus. A growing number of chic rooftop restaurants embrace views of ages-old icons — Hagia Sophia, the Blue Mosque and Süleymaniye Mosque.

The city's first modern-art museum took up residence just over three years ago in a converted waterfront warehouse and now draws 1,200 or so visitors daily.

A boom in shopping malls — almost 100 at last count — along with small shops and art galleries in posh neighborhoods such as Nisantasi, is honing Istanbul's image as a shopping mecca.

And though Turkey has yet to be admitted into the European Union, its major metropolis has been selected as the EU's European Capital of Culture in 2010.

Tourism is booming. More than 23 million international visitors came to Turkey in 2007, including a record number of Americans. Although their numbers are relatively small (650,000 last year), U.S. travelers are among the fastest-growing segment of foreign visitors.

(The U.S. State Department advises that the possibility of terrorist attacks from leftist or Islamic groups "remains high," but most violent incidents and demonstrations have thus far occurred in non-touristed areas).

And while Turkey ranks in the world's top 10 most-visited nations, it had been marketed primarily as a low-cost beach destination. But that, too, is changing, with a new emphasis on cultural tourism.

Some of the rise in Istanbul's touristic fortunes is a result of the growth in cruise-ship traffic. This time of year, floating behemoths jam the harbor, disgorging thousands of passengers into Sultanahmet, the city's old quarter and locale of most of its signature sites.

There's the Topkapi Palace, home for 400 years to the sultans and their harems, and repository of almost unimaginable wealth — egg-size emeralds, a 52-karat diamond, the jewel-encrusted Topkapi dagger. And the inspiring sixth-century Hagia Sophia, the church-turned-mosque-turned-museum with its soaring domes. And the incandescent interior of the Blue Mosque, shimmering with 20,000 blue-green wall tiles.

In fact, so many must-see attractions are crammed into this relatively small peninsula bordered by the three waterways that shape the city — the Bosporus, the Golden Horn and the Marmara Sea — that many casual visitors never venture far beyond its confines.

Those who do encounter a rush of humanity unparalleled in American cities. Population figures are variable — from 12 million to 20 million — so many Turks are moving in from the countryside, the reality may be that no one knows the true number.

Traffic is a maddening snarl at any time of day. Spots such as popular Istiklal Street, a sort of pedestrian Champs-Elysées in the Beyoglu neighborhood, routinely draw the sort of crowds associated with mass demonstrations in other cities. The thoroughfare branches off into a warren of narrow streets crammed with outdoor cafés and traditional Turkish restaurants called meyhanes that remain open late into the night.

Happily, the tourist hordes can't detract from Istanbul's essential exoticism. Men wash their feet in the ablutions fountains outside the mosques in anticipation of the call to prayer. Corner vendors hawk sesame-studded simits (a bagel-like bread). Merchants in the 350-year-old Spice Bazaar trumpet the virtues of "Turkish Viagra," based on an herbal concoction they claim helped sultans keep harems happy.

As in other European destinations, U.S. visitors will feel the pinch of the shrinking value of the dollar. Not long ago, Turkey was a relative bargain. With the Turkish lira up more than 30% against the dollar in the past two years, Istanbul may still be less pricey than many major European cities, but it isn't cheap.

Also sparking steeper prices is a growing middle class that demands better goods and services and is willing to pay for them.

"People are getting more outspoken in general," says Ali Ilter, who returned to his native Istanbul after graduating from the University of Southern California. "But Turkey is still like Mexico. There is so much money in so few hands."

Indeed, Istanbul ranks No. 4 (ahead of Hong Kong and L.A.) on Forbes' current list of cities with the most billionaires. Advance bookings for weddings with a typical tab of $50,000 or so are brisk at the yet-to-open Four Seasons hotel, with its marble seaside terrace tailor-made for such lavish events. And gradually, the city's image, associated by outsiders with well-worn clichés such as carpets and shish kebabs, is adding new dimensions.

"People don't expect fine arts from Turkey," says Kasif Gundogdu, owner of Sofa, an art and antiques shop crammed with Christian and Islamic treasures, plus contemporary Turkish art.

The outspoken collector settles down at day's end with a whiskey, holding forth on everything from the current popularity of Ottoman antiques among the Turkish bourgeoisie to the downside of globalization. International brands only push up rents in neighborhoods such as this and destroy the area's cultural richness, he declares.

"I love this city," Gundogdu says. "And that's why it's my dream to see it one day be much better than Prague or Rome."