Jonathan Allen, New Delhi: At Khan Market in New Delhi shoppers can get a quick haircut for 30 rupees (68 cents), browse a variety of plastic buckets filled with bargains, or spend $6,000 on an exquisite Swarovski crystal swan.

This shabby parade of stalls housing slick international brand showrooms alongside cluttered "mom and pop" stores is the most expensive retail real estate in India. Khan Market rose 17 places to 24th place in an annual global survey by real estate service firm Cushman & Wakefield, while New York's Fifth Avenue, Hong Kong's Causeway Bay and the Avenue des Champs Elysees in Paris took the top three spots.

The cost of new tenancies in prime spots went up 75 percent to $180 per square foot per year in Khan Market in the first five months of this year, compared to $1,350 on Fifth Avenue, according to figures from Cushman&Wakefield. The scramble for space here is a prime example of India's hyper-accelerated economic growth knocking its head against bad infrastructure and a slow bureaucracy.

With overhead wires tangled across the U-shaped complex's unevenly-paved lane, walls barnacled with hulking ventilator units and the meaty waft from the kebab stalls, there is no mistaking Khan Market for those other illustrious addresses. "Khan Market is definitely not the Champs Elysees," said Isabelle Levens, a Parisian now living in New Delhi who sounded surprised to hear the two places mentioned in the same sentence. "It's just the nearest shops to the children's school," she explained as she browsed for toys.

It is precisely the market's closeness to some of Delhi's most expensive residential streets that has seen rents swell, even as around 30 low-value businesses continue to prosper thanks to rents frozen at 1950s prices because of rent-control laws. After decades of poor city planning, and with the municipal authorities belatedly sealing up illegal retail districts, Delhi's relatively few legally zoned retail spaces such as Khan Market are becoming ever more valuable. "There is such a shortage of space in Delhi that there's a huge upward pressure on rents," said Sanjay Dutt, a Cushman & Wakefield executive.

Many well-paid foreign diplomats, journalists and other expats live close to Khan Market in leafy gated neighbourhoods, alongside politicians and wealthy business executives. Foreigners and well-groomed Indians head to the market's crampedgrocers to pick up a few items, shop assistants trail behind carrying their baskets.

Younger middle-class Indians wearing sunglasses and Western fashions come from further afield, squeezing between parked cars and dodging stray dogs to step inside one of several smart cafes. "Indians are just used to these kinds of dilapidated conditions," said Sanjiv Mehra, the current president of the Khan Market Traders Association, who sits most days at his desk at the back of his small toy shop.

On the wall, next to a miniature Hindu shrine, hangs a photograph of his late father, Dilbagh Mehra. He was one of the market's original tenants when it was built by the government in 1950 as a rehabilitation project, housing businesses of Hindu refugees fleeing from what is now Pakistan during the partition of the subcontinent. "He came here in 1947 with 643 rupees in his pocket," said Mehra of his father. Mehra's family now run eight shops in the market.  He says he could make much more money giving up his mostly low-value businesses and renting out the spaces to foreign luxury brands. "But then what else would I do with my days?" he said.

Traders say jeans company Lee Cooper was the first international brand to move in the early 1990s, when India began to open up its economy to foreign investment. Lee Cooper has since left, but clothing brands Levi Strauss&Co., Nike and the United Colours of Benetton, along with Subway and McDonald's restaurants, are some of the dozen or so international companies to be found here. Swarovski, the Austrian crystal company, had been trying to get into Khan Market for more than three years before it bagged a tenancy here in April.

The company pays 350,000 rupees ($7,830) a month in rent for 434 square feet of shop space, said Vishnu Sharma, one of Swarovski's Indian partners.  He wishes he got smarter surroundings for the money. "They do complain about how the market is so shabby looking, or foreign customers do anyway," he said. 

"Indians are used to it... I would love to see Khan Market look more like Fifth Avenue. "But Sheila Dikshit, Delhi's chief minister, says she is in no rush to see it made over. "It may not be very chic or smart," she told Reuters, "but it's got a warmth you don't find in many places any more."