On a crisp spring October morning in Villa Crespo, Cristina Fernandez de Kirchner’s smiling face follows me down the cobbled tree-lined streets. Plastered on every crumbling corner of this part of town, the Argentine president’s fist-pump peace sign is accompanied by the words “Companera, cuente con nosotros para lo que falta” (comrade, count on us for whatever you need), and just a little graffiti.

A few weeks after my visit, Fernandez was re-elected in a landslide victory, trumping her nearest opponent, socialist Hermes Binner, by 54 per cent to 17 per cent and cementing the country’s hard-won economic and political stability following decades of uncertainty.

“After Argentina’s catastrophic economic meltdown in 2001, the number of people living on the poverty line increased to nearly 50 per cent,” says Colin M Lewis, professor of Latin American economic history at the London School of Economics (LSE). “Now 60 per cent of Argentinians are considerably better off than they were in 2000-02. In that sense, Fernandez should have got 60 per cent of the votes.”

When Argentina defaulted on a US$132 billion debt ten years ago – the largest default in history – the road back seemed inconceivably long. Marred by years of hyperinflation (from 1944 to 2010 the average was 215 per cent), corruption and military intervention, the country’s dramatic turnaround could not have been predicted. Since 2003, annual economic growth has been, on average, 8 per cent, and it shows.

“Buenos Aires has changed a heck of a lot in the past six years,” says Paul Irvine, co-founder of luxury South American travel operator Dehouche (dehouche.com). “In 2003 it was pretty edgy – there were people digging through rubbish and stray dogs everywhere. Now the tax regime is okay, businesses from abroad are coming in – maybe because it’s so cheap and everyone knows it’s not going to stay that way forever.” Buenos Aires was ranked the 159th most expensive city for expatriates in consulting firm Mercer’s 2011 cost of living survey, compared with Sao Paulo (tenth) and Rio de Janeiro (12th).

Measures taken to balance the books post-2001 initially deterred foreign investment. Subsidies on energy helped Argentinians but were not afforded to overseas companies – “I’m not the president of the corporations, I’m the president of the 40 million Argentines,” Fernandez said in defence of the policy. Caps were put on energy and transport tariffs and renationalisation became rampant.

When growth stabilised, steps were taken to attract business again. Incentives for oil companies introduced in 2008 proved particularly successful, with Chinese energy firms Sinopec and Chinese National Offshore Oil Corporation investing US$13 billion in 2010, and fellow energy companies Repsol, Exxon Mobil and Apache reopening bases in Buenos Aires the same year. In 2011, Spain’s Repsol YPF discovered a billion barrels of shale oil in Argentina – which could make the country the number one producer. (Consequently, there’s now talk of YPF – formerly Argentinian-owned – being renationalised.)

“Business demand is increasing at a rate of knots,” says Irvine, who has seen a growth in requests for meetings and incentives from London-based corporate finance firms. “Companies from around the world are just starting to do business here – they have to. If you are in any sort of sphere of business and don’t have exposure to South American markets, you’re missing out.”

The Economist Intelligence Unit has predicted a drop in the country’s growth to 4 per cent this year but, regardless, prosperity is evident. Trendy Palermo Soho and Palermo Hollywood are sure signs of a rapidly growing middle class – wide paved streets are lined with neocolonial painted villas housing cafés and independent boutiques. The area is packed with restaurants, where two of the nation’s greatest exports are celebrated – steak and Malbec. Moments away from Plaza Cortazar, where craft stalls flog art and handmade jewellery, Cabernet (at 1,757 Jorge Luis Borges) has a beautiful tree-sheltered courtyard and huge steaks from 80 pesos (£12). The area challenges New York in the style stakes and Paris for sheer charm.

A few blocks away from Palermo, Villa Crespo – an old industrial district that has morphed into a vibrant muddle of chic bars and mechanics’ garages – has retained its porteno (“people of the port”) spirit, though a new US$50 million mall announced in December will open nearby in 2013.

On the other side of Palermo, Belle Epoque-era townhouses fill Recoleta, one of the smartest districts in town. The mix of designer stores, embassies and well-heeled locals contrast with the tourist trap of Recoleta cemetery, where the Buenos Aires elite demonstrate their wealth even in death with elaborate mausoleums.

Past here, Retiro is the financial district, a nondescript mix of busy roads and bus terminals. A short way south, the historic neighbourhood of San Telmo typifies the Buenos Aires spirit, with its ageing colonial-era churches, antiques stores and squares full of dancers practising the tango.

Turn towards the port and you will see the city’s ambitions laid out in front of the Rio de la Plata. Affluent Puerto Madero, abandoned to decay in the eighties and transformed in the nineties, is lined with 50-storey glass high-rises and red-brick warehouses, some of which are now boutique hotels. Google opened its Argentinian headquarters here in 2008, and there is a Hilton and a Conrad hotel.

Luxury residences the Alvear Tower and the Aleph will both open here in 2013 – the latter is part of the Faena group, dominating the area with its mix of Philippe Starck-designed residences and hotels, while the former will be the capital’s tallest building, at 54 storeys. Repsol’s glittering 160-metre-tall headquarters – completed in 2008 and designed by César Pelli, the Argentine architect behind Kuala Lumpur’s Petronas Towers – is a testament to the return of international business.

The government is also taking steps to create specialised commercial districts, including a high-tech centre in Parque Patricios. When Google moved to Argentina, its chief executive Eric Schmidt declared: “Latin America has the fastest growth in the internet sector – more than Asia, the US and Europe,” and today it is reported to have the fastest-growing wireless sector.

There are more than 80 businesses registered in the new 200-hectare technology district including telecoms, software and hardware companies. According to Invest BA, which promotes trade and investment in the capital, the average house price in the area went up by 12 per cent in 2010, two years after the project began.

“We put 60 police officers here and it changed the lives of local people,” economic development minister Francisco Cabrera said last year in an interview with news website ciudad1.com. “In a few years it will be one of the nicest neighbourhoods of Buenos Aires.”

A 30-minute drive north leads to the audio-visual district, where TV, film and video-game companies are setting up shop. The area – covering Paternal, Chacarita, Villa Ortuzar and Palermo – was a natural choice, given 100 of the city’s 400 audio-visual companies were already in Palermo. “The idea is to give them tax incentives [including a new free zone] to move in. They, in turn, give new life to these neighbourhoods,” Cabrera said.

Meanwhile, tourism continues to boom. “In 2010, we reached a record of ten million visitors,” says Federico Esper, general director for research and training at Buenos Aires Tourism Observatory. “In 2011 we expected growth in domestic tourism of 10 per cent, and 5 per cent in international.” To cope with demand, Esper says US$1 billion was invested in the city’s hotel industry in the past four years (see panel, page 64, for some of the capital’s luxury boutique properties).

Esper says the growth in visitors from Asia – and from China in particular – is important. New air links from Europe and the Middle East are also set to boost tourism. In March last year, British Airways split its London-Sao Paulo-Buenos Aires service to provide a daily direct flight to the Argentine capital, the only direct service from the UK.

“Corporate clients had been lobbying us to separate the route, and it’s proved popular,” says Richard Tams, BA’s head of UK and Ireland sales and marketing. “Many financial companies are increasing operations, so there’s a good business class demand alongside the city’s growing popularity as a leisure destination.” KLM introduced three weekly flights from Amsterdam to the capital last year – which will increase to four times-weekly next month – while in January, Emirates launched a Buenos Aires-Rio de Janeiro-Dubai route.

On the ground, metro lines are being extended west and to Retiro, and there are plans for three new lines. In the past year, new cycle lanes and a metro bus service (modern buses with a dedicated lane) have been introduced, although for business travellers the swiftest way to get around is by taxi. International airport Ezeiza is a 30-minute drive in good traffic – however, this is a rarity.

Despite the buoyant mood, one key issue mars optimism. Historically, political instability and inflation have led to nervous financial markets and capital flight, and Fernandez’s decision to curb the exchange of pesos to dollars could be a cause for concern (Argentines typically convert to dollars to protect savings).

“Increasing control on the number of dollars individuals can buy a month, let alone corporations, is seen as a key political and economic indicator,” the LSE’s Lewis says. “It indicates that reserves are declining, and the government is perhaps losing control of the economy.”

Inflation is reported to be about 9 per cent, but the real figure is widely considered to be nearer 25 per cent. Argentine agencies publishing their own figures have been threatened with criminal proceedings. This has not gone unnoticed by the international community and, in November, the International Monetary Fund left Argentina out of its Latin American tour as it failed to provide adequate statistics.

Still, on the streets of Buenos Aires, these murmurings could not be more distant. Young portenos are out in force, restlessly opening new galleries and restaurants each week, while in the squares of San Telmo, the mood is light, the wine flows freely, and the dancers tango long into the night.

BOUTIQUE HOTELS

Faena Hotel and Universe

Housed in an old red-brick grain mill in Puerto Madero, the 108-room, Philippe Starck-designed Faena is suitably dramatic. Two restaurants, a bar and a tango hall are located off a long, red-lit corridor. El Mercado eatery is a mix of industrial lampshades and Victorian memorabilia, while El Bistro is an Alice in Wonderland fantasy of pure white and unicorns. Guestrooms are finished in velvet and white leather, and event spaces include a 280-capacity ballroom and three boardrooms. The elegant outdoor pool is better suited to posing with cocktails than doing laps.

Algodon Mansion

This 1912 mansion – the capital’s first Relais and Châteaux property – is a great example of the Belle Epoque architecture common in Recoleta. It reopened in September 2010, having been converted to create ten generously proportioned suites, each with a spacious bathroom and lounge. Suites come with a free bottle of wine from the Algodon vineyards and 24-hour butler service. The 120 sqm Algodon Royal Suites feature a wine bar and dining area for 20, and there is a 50-seat restaurant, cognac bar, cigar lounge, spa and rooftop pool.

Palermo Place

Opened in May last year in Palermo Hollywood, this intimate property has 26 suites, all with their own kitchens. There is no restaurant on site but dining tables can be set up on the eighth-floor roof terrace if you wish to have food delivered. There is a five-star concierge service, free wifi and the option to set up a long-distance telephone bundle to cut costs. Spa treatments are available by appointment.

Alvear Art hotel

This 139-room property is due to open in September, a few minutes’ drive from Retiro and Puerto Madero. An affiliate of the classical Alvear Palace hotel, it will feature a restaurant with a winter garden, a spa on the top floors, meeting space for 250 delegates theatre-style, and a business centre. The rooms – and two suites – will be contemporary in style, with 24-hour room service and bathrooms equipped with spa baths.