After the bombs comes the boom: Belfast savours peace dividend

The man in a sharp suit at the Apartment, one of Belfast's new trendy bars, put down his cocktail and pointed to a spot in the street where a car bomb once went off.

The man in a sharp suit at the Apartment, one of Belfast's new trendy bars, put down his cocktail and pointed to a spot in the street where a car bomb once went off.

"People are tired of all that shit," he said. "This is the future – we're a party town."

Relaxing amid the decor of polished wood and leather armchairs that would not have been out of place in New York or London, he and another 200 drinkers were reaping the benefits of the peace dividend or what others call "a nice wee bit of normality".

Last night, central Belfast's pubs, night spots and restaurants were packed with revellers. An armoured RUC Land Rover, a reminder that other parts of this city remain far from tranquil, was there for nothing more sinister than directing traffic.

Even before this week's momentous events, the Good Friday Agreement – and £400m of investment – has transformed Belfast. While the rest of the United Kingdom struggles to keep tourism numbers up, the city is booming with 1.6 million visitors a year – double the level of six years ago and dwarfing the city's population of 284,000. Morgan Watson, manager of the Apartment, which opened 12 months ago opposite Belfast's grand neo-classical city hall, said: "Central Belfast has changed. Even up to a couple of years ago, people would not come here because it was always a terrorist target.

"When we suggested opening this place, people said we were mad, the centre was deserted. Now it is packed, there are people in the shops until 9pm and others staying around for a night out. It is a normal city and that's a great thing."

But the Northern Ireland capital, which this week staked its claim to become the European City of Culture for 2008, is indeed nothing if not diverse in its range of entertainments. On Thursday night alone, its residents had a choice between a Jools Holland concert, a post-apocalyptic ballet by a Japanese theatre company and a performance of the Barber of Seville by the Welsh National Opera at the newly renovated Grand Opera House.

The Waterfront Hall, the gleaming steel and glass venue that is, for many, a symbol of the rejuvenation of the city, is visited by 500,000 people a year along with similar numbers to the Odyssey, a multi-million pound leisure complex built for the Millennium.

Art galleries and exclusive fashion boutiques that have opened on the Lisburn Road, south of the city centre, pay testimony to a new affluence. Tour companies have even started offering Belfast as a destination for stag and hen parties. Tourism and economic development chiefs, who aim to double the number of visitors to Belfast to 3.2 million a year within five to seven years, believe domestic and international perceptions of the city have changed dramatically.

Mary-Jo McCanny, communications director of the Belfast Visitor and Convention Bureau, said: "We don't pretend that we're selling this city to people who haven't heard about it because of the events of the last 30 years. But there is another side to the story – a place where you can expect a fantastic welcome and a great diversity of culture, commerce and landscape. If you're a tourist, this is one of the safest cities to visit in the world. We're a European city."

But while everyone welcomes the prospect of greater economic prosperity, there was recognition that less than two miles from the bars and theatres lie places like the Ardoyne in north Belfast, where schoolchildren daily run the gauntlet of cross-community hate.

At Queen's University, where students mix freely, there was an air of realism about Belfast's new dawn – there may be lots of trendy bars but most still have to pay protection money to the paramilitaries. Donna McGrath, 28, a human rights student, said: "The truth is that the conflict has always been in the small, deprived areas. It hasn't really affected middle class Belfast but it will carry on in places like the Ardoyne Road, perhaps for ever.

It is good that we have an ideal – to create a democratic, peaceful society where children don't grow up learning to hate the people across the road. We've made a start and you can see the improvements in Belfast but it's always very difficult to reach a utopia."