London's Dover Street Market has the cutting edge

What you get at DSM is distilled fashion, not simply clothes. Every piece is a tribute to the artist lurking within the designer.

Harrod's is pulling out all the stops to attract international guests but is ceding some of its cachet to the Dover Street Market.

This week, as I treated myself to an espresso in the latest place for the chic shopper to be seen in London - the Ladurée pavement cafe behind Harrods - I noticed that the red sale signs had been replaced by glossy placards advertising Qatari real estate, and Harrods' latest shopping promotion: "The Rare, Precious and Beautiful!" For once it didn't feel like I was in the midst of an economic downturn. Glancing at windows to my right - a display entirely devoted to Chanel, with a glorious navy tweed jacket, a red leather quilted handbag and decadent, Russian-inspired pre-autumn pieces - it reminded me of the good old days.

To my left, the window featured the latest luxury yacht accessory, the Seabob, by the German high-end sports specialists Cayago. The underwater sled comes in an assortment of eye-popping shades to co-ordinate with your bikini. And then I remembered. London is currently rolling out the red carpet to a record number (140,000) of Middle Eastern visitors. Most of the big retailers, Selfridges, Harrods and Liberty, in particular, are pulling out luxurious pieces usually kept under wraps in dusty stockrooms to entice spenders from the United Arab Emirates, Saudi Arabia and Egypt.

London is perking up as a result. Take Harrods, which has extended its famous French macaroon-selling shop into an open-air cafe that feels like an exclusive beach club and boasts the most reassuringly expensive coffee prices in London. I'm not quite as impressed by the "extras" laid on by Selfridges and Liberty, which consist of a few comfy sofas plonked in designer areas. It's a nice touch, but hardly enough to wow international customers.

If I had money burning a hole in my pocket and limited time in London, I'd give Knightsbridge, most of the West End and Hoxton a wide berth and cab it over to the Dover Street Market. The market is nestled beside Prince William's favourite haunt, Mahiki, and a smart Mayfair art gallery. Perhaps I shouldn't have been surprised when I visited last week to learn it was expecting its annual summer onslaught by the younger generation of Arabs.

Now in its fifth year, DSM still feels like an artwork in progress in terms of display and space, with its metal bars and concrete floors. In terms of content - a mixture of the incredible, aspirational and rare - its founder, the designer Rei Kawakubo, has accomplished what she set out to do. On the surface, it might not strike you as luxurious, but the more you explore the neatly edited collections by cutting-edge names who fight to get their clothes in there (Givenchy, YSL, Azzedine Alaïa), it's a unique shopping experience.

Karl Lagerfeld calls it his favourite shop in the world because what you get is distilled fashion, not simply clothes. Every piece is a tribute to the artist lurking within the designer. Because it remains one of the city's best-kept secrets, there is also an air of mystery and anonymity to the place. The combination of high prices and high fashion keeps away anyone except the fashion curious. Most of the time it's pretty empty.

As a public relations officer gave me a sneak preview of the new autumn/winter ranges, she told me how I had just missed three generations of the same Middle Eastern family. They had popped in for breakfast at the Rose Bakery on the fourth floor before moving to the "girlie third floor" below. The 20-year-old had tried on Lanvin and Givenchy in the birdcage fitting rooms created by Michael Howells (who designs catwalk sets for Alexander McQueen and John Galliano). She was encouraged by her mother and grandmother, who nodded enthusiastically as the young girl showed them more and more outrageous pieces.

Sorry, Harrods, but in terms of the rare, precious and beautiful, Dover Street has the edge on you. I hadn't seen so many decadent outfits (sequins, patent fabrics, embroidery, embellishment and gold) housed under one roof. As for the handiwork, the craftsmanship, the limited editions and the luxury - from the Bibi jewellery range, to Ileana Makri's coloured diamond pavé eye pendants, to Junya Watanabe's gold lurex twisty dresses - when it comes to pleasing that gorgeous Gulf customer, Dover Street Market, as we say in London, has it "sorted".