It's barely 10am on a Friday morning and long queues are snaking outside the Tate Modern. The Victoria and Albert Museum is buzzing, with excited school groups being ushered into galleries to explore the world's largest collection of applied arts and design. Over at the National Portrait Gallery, a sacred hush falls over visitors upon entering the presence of the 18th and 19th-century ruling classes painted by masters such as Holbein, Van Dyck and Gainsborough.

Welcome to London - the British capital that boldly infuses food, fashion, art, architecture with the cultural diversity derived from 2,000 years of history. This city offers one chief attraction: art of exceptional quality everywhere you look - from ubiquitous galleries like Hauser, Gagosian and Saatchi to the annual Freize Art Fair showcasing fresh talent to visitors around the world.

Titus, the Artist's Son by Rembrant in the Wallace Collection

Art and commerce have been happily canoodling for years: auction titans Christie's and Sotheby's have turned tremendous profits during the dizzying heights of market buoyancy, while a mixed bag of studio collectives and artist-run contemporary art spaces in the West End have received notable government and private sponsorships in better times.

In today's depressed economy, the British government's focus on art and culture as an economic strategy seems eerily prescient. Entrance fees to major art venues which were scrapped since December 2001 now make London's art attractions increasingly accessible and attractive: the Tate Modern's visitor figures between 2006 and 2007 reached 5.2 million, twice that of the Museum of Modern Art in New York at 2.6 million and Centre Pompidou in Paris which attracted 2.5 million visitors in the same period.

Indeed, the Tate Modern, which sits in a renovated power station across the Millennium Bridge, is a living attraction that well deserves the crowds. Its outstanding collection of national and international modern art spells pure Hollywood for art lovers: stars from Picasso to Matisse, Warhol to Lichtenstein as well as the hottest contemporary artists are housed all under one roof. Various blockbusters increase visitor numbers, particularly over the weekends.

Mark Rothko

The retrospective of Mark Rothko, open now until Feb 1, 2009 showcases 50 of this abstract expressionist's final works from 1958 to 1970. There is plenty to look at here, including the famous Seagram murals commissioned for the Seagram building in New York in 1958, 14 of which have been brought together for the first time. Highlights also include the Black-Form paintings and his large-scale Brown and Grey works on paper.

The most stunning, however, remain Rothko's last series of Black on Grey paintings. It exudes an overwhelming intensity and emotional depth unseen in previous works: the sharp demarcation of the painted surface throws off any chance of attaining pictorial balance, all signs pointing to Rothko's troubled state before his suicide in 1970.

To maintain London's status as a leading arts capital means adapting to rapidly changing tastes. And the public's collective unconscious is certainly mercurial when it comes to art appreciation. Art institutions are constantly keeping up with the times by experimenting with new forms and ways of presenting artwork, even by mixing themes and eras.

Cildo Meireles

Brazilian artist Cildo Meireles's conceptual art exhibition, which runs parallel to the Rothko exhibition, is at once beautiful yet foreboding, gritty and strangely seductive. It contains some of his most politically telling and philosophically intriguing works of the past four decades. Going through it is particularly compelling as visitors crunch through shards of broken glass in a complex labyrinth of barriers from iron wire fences to domestic shower curtains to reach a crumpled cellophane centre, Clear Sphinx.

A painting by Mark Rothko from the Black on Grey series

By negotiating Meireles's maze, one participates in his abstract, social commentary on the basic human desire to frame and retain life's experiences in order to live in today's challenging world.

The uncanny ability to capitalise on passing trends and incorporate them into the mainstream, securing competitive advantage, further establishes London's stronghold in the market. "Success in establishing photography as a recognised art form and introducing a generation of visitors to the most important names in photography has resulted in a big growth of activities," explains Brett Rogers, director of The Photographer's Gallery, the largest public photography gallery in London.

Annie Leibovitz

Further capitalising on the audience's demand for new ways of representation is the National Portrait Gallery's latest blockbuster, Annie Leibovitz: A Photographer's Life, 1990-2005. It encapsulates the perception of photography as fine art, while satisfying the public's insatiable appetite for sentiment within popular culture.

Despite the title which can easily be dismissed as an ego gratification exercise, the show is surprisingly intimate and alluring. "I don't have two lives. This is one life, and the personal pictures and the assignment work are all part of it," declares Leibovitz. While projecting a unified narrative of her private and public life, the penetrating images are subtle and provocative.

In traditional Leibovitz fashion, she manages to retain substance and individuality while playing photographer to the stars, acknowledging them as celebrities while placing them in everyday situations. Hollywood actor Brad Pitt lies sprawled across a hotel bed in Vegas, one hand absently reaching to caress his blond hair, the other relaxed around his waist. His expression is resigned and absent, presumably exhausted after a long day of filming.

The most striking portraits, however, are those of Susan Sontag, Leibovitz's companion of 15 years. These images read like a strange travelogue of sorts: Sontag at rest on a couch in the Hamptons, posing at the Hotel Gritti Palace in Venice and poised on the banks of the Seine. One flinches at the rawness and intimacy of images which lead up to her eventual passing: in the bath after a mastectomy, and finally, laid to rest in her favourite dress in 2004. The combination of objects and settings creates a poetic but tragic resonance, touching the very essence of your heart and soul.

And of course, an arts capital is measured by the historical value, quality, depth and rarity of its national treasures. The National Gallery has an astounding number of Old Masters within one of the best known collections of Western European painting in the world.

Wallace Collection

Art exhibition by Brazilian artist Cildo Meireles at the Tate Modern gallery

It is interesting to note that the lesser known Wallace Collection possesses a larger collection with over 5,500 works of art. "Some of the most wonderful Old Master paintings in the world, furniture, pictures, porcelain and goldsmiths' work from 18th-century France, medieval and Renaissance works of art, 19th-century paintings, and a stunning collection of arms and armour reside in the collection," explains Rosalind Savill CBE, director of the Wallace Collection.

Indeed one would be hard pressed to find another museum which contains such a large collection of Marie Antoinette's furniture and paintings outside of Versailles, together with 18th and 19th-century masterpieces from Titian, Rembrandt and Velasquez. It also houses Titus, the Artist's Son by Rembrandt (1657), which remains one of the best examples of Rembrandt's technical virtuosity. Throughout the collection's history, experts have questioned several works which were subsequently re-assigned to Rembrandt, but this was one creative triumph that went unquestioned.

This collection is well accompanied by a provocative and scandalous history: it was bequeathed to the nation by Lady Wallace in February 1897, after being acquired by four generations of Marquesses of Hertford and the fourth Marquess's illegitimate son Sir Richard Wallace between the 1780s and the 1880s.

Perhaps it is due to the sheer size, diversity and resources combined with the ease of accessibility that strengthens London's position as a leading arts capital. The commitment to harnessing creativity and keeping up with the times allows this city to lay an authentic claim to culture, art and entertainment as core assets, forming the backbone of its economic strategy.

As the sun sets in this cultural centre, grey skies and an icy breeze warn that winter is fast approaching. Tourists scramble to take refuge in warm, stately, art institutions where awe-inspiring old and contemporary art masters, Chaucer's Canterbury Tales and the Magna Carta reside in the same blessed city. It's contemplative, poetic and pretty as a picture. Annie Leibovitz would agree.

This article was first published in The Business Times on Nov 22-23, 2008.