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After 17 months of misery, luxury home prices in London are finally up on an annual basis. Banking and hedge fund industry professionals are spending money again, largely because they're being paid again. Homes with values of above $1.6 million appreciated 1.6 percent in November compared to the same month last year. This was the first annual increase since June 2008. Nonetheless, prices remain 15 percent lower than the March 2008 peak. From October to November, prices grew 1.2 percent.

Liam Baily, head of residential research at Knight Frank, told Bloomberg News, "Anecdotal evidence from across our offices suggests that City money is becoming more apparent as we get closer to the end-of-year bonus season," continuing, "Demand from senior management is driving the market." Bonuses could wind up growing by 50 percent this year to 6 billion pounds in London's largest financial districts, and professionals in this industry are responsible for half the city's demand for luxury homes.

For homes at prices of more than $16 million, the price increases are even better: 1.9 percent from October to November this year. Residences in Chelsea, Kensington and Knightsbridge got the biggest boosts.

This has led to a bit of optimism. Luxury real estate could reach May 2008 levels by 2012, up to two years earlier than expected.

Celebrate if you own an Ed Ruscha print. At a Bohnams and Butterfield's auction last week, excited bidders pushed Standard Station (E.5) past its high estimate of $40,000 ... all the way to $170,000 and a new record for Ed Ruscha's work. The previous top spot for Ruscha was $133,000 for Hollywood, which was attained during the art boom in 2007.

The record-setting piece features a red gas station, an image now associated with Ruscha, and is #33 in an edition of 50 (a pretty large run). The strong auction performance follows an enormous retrospective held for the artist at London's Hayward Gallery and recognition by Americans for the Arts with its Artistic Excellence Award.

But, there's no prize so grand as an outstanding performance at auction.

Ukraine is about to get a new contemporary art center. Victor Pinchuk is shooting to make Kiev a major art destination, so the wealthy art collector is creating a new center that will be larger than the existing PinchukArtCentre, which was the first private contemporary art center in the former Soviet Union and has had more than 830,000 visitors since its doors swung open in 2006.

Pinchuk, a steel billionaire, is an avid collector, with pieces by Jeff Koons, Damien Hirst and Andreas Gursky. His new endeavor, he tells Bloomberg News, "will make Kiev and Ukraine a fantastic place for contemporary art." Pinchuk made the proclamation at a show for 20 Ukrainian artists who were nominated for the first Pinchuk Art Center Prize, which comes with a cash component of $12,200 and a one-month internship with an artist from the international scene. Hirst himself will announce the winner on December 4, 2009.

Pinchuk has a strong relationship with the artist celebrity and owns "probably half" of the skull paintings (by the collector's own estimation) in the current Hirst show at the Wallace Collection in London. He also participated in Hirst's solo auction in September 2008 but wouldn't tell what he bought.

I guess everyone has to eat, even in a recession. When the light appears at the end of the tunnel, though, appetites get bigger ... and more discriminating. In London, upscale eateries are seeing the investment banking crowd come back, and the wine is once again flowing. The cities top chefs are still worried about what will happen after Christmas, but for now, they're happy to see their creations gobbled up by the city's financial sector.

Marcus Wareing has had what he calls "a fabulous year." The waiting list keeps getting longer, and he says, "There's a good vibe." Tristan Welch's Launceston Place is seeing more wine flow, and demand is picking up. Pearl's Jun Tanaka remains cautious, "We'll really know in the first quarter 2010 if business has returned ... I don't know if it's a trend or a hiccup."

Across the city, there's a mix of optimism and trepidation. Le Gavroche, Wahaca and Le Café Anglais, for example, offer some variation of "Business is good" or "Business is booming, and Gordon Ramsay tells Bloomberg News, "There's an increasing air of confidence, which has been particularly apparent since the beginning of September." Michelle McGuire of The Palm said the restaurant had its busiest week three weeks ago since its opening in May, "with record takings." Sam Hart, of Fino, Barrafino and Quo Vadis, on the other hand, calls the improvement "fragile."

Nonetheless, this is a far cry from the angst that characterized the fine dining world a year ago. When people start to eat well, you know that things are turning for the better.

Damien Hirst is again playing the role of philanthropist (so I have to be nice), along with Raqib Shaw and Marc Quinn. The artists have donated paintings to an auction that London jeweler Laurence Graff is holding for FACET (For Africa's Children Every Time). Graff wants to raise $1.26 million for the organization, which seeks to support the education, health and quality of life of children in Africa ... where Graff Diamonds picks up most of its raw material.

Graff's event follows several other charity auctions this year, all of which were pretty impressive in their results. Sotheby's raised ₤453,950 for two organizations that help orphans in Africa, and Christie's raised an astounding €342.5 million at its Yves Saint Laurent collection auction back in February – the money will be used to fund HIV research and fight the spread of AIDS.

The first lot donated was by Graff himself: diamond earrings estimated to be worth around ₤80,000. The other paintings (e.g., by Hirst) are pegged at around ₤100,000 each.

Sotheby's, Christie's and Phillips de Pury have released their estimates for the October auctions, and late summer signs of confidence have disappeared. Contemporary art forecasts for next month's auctions are down 81 percent from October 2008 – which was the first series of auctions conducted following the financial crisis.

The three auction houses expect to rake in around $33 million during London's Frieze Art Fair, according to Bloomberg News. Last year's low-end estimate (not accounting for currency fluctuations) was five times greater than this year's low-ball number. And, last year, the houses were offering minimum price guarantees to sellers, a practice that has since been suspended.

Frustrating the situation for auction houses further is the fact that many collectors are turning to private sales rather than auctions, as they hope to retain a greater degree of control over the outcome of the transaction. If the buyer doesn't agree to a sufficiently high price, the seller at least walks away with his piece.

The coming of the Frieze Art Fair includes contemporary art auctions by Christie's and Sotheby's which will be held on the same day. The former will send 25 lots under the gavel on October 16, 2009, with a low estimate of ₤6.8 million. This is a profound drop from 2008's 47 lots (six guaranteed) and a low estimate of ₤57.8 million. The only promising sign earlier this year was an increase in sold rates, with Christie's moving 88 percent of its lots in June and Sotheby's selling 92.5 percent.

The time to grow is when the market is suffering. This must be in the back of the mind of art market guru Larry Gagosian, who has been involved with such heavy-hitter artists as Damien Hirst and Richard Prince. While there are small signs of a recovery, much is still uncertain. However, this hasn't stopped Gagosian from making a bold move: opening a branch of the Gagosian Gallery in Paris.

Bloomberg News reports that Gagosian is in talks to pick up space in the 8th arrondissement, near la rue du Faubourg Saint-Honore. Nobody from the Gagosian camp has commented so far.

There are plenty of deep-pocketed art collectors in Paris, including Francois and Bernard Arnault, and the French market hasn't suffered as severely as those in London and New York. That said, Paris is the smallest of the western troika, but with a presence in the two largest markets already, the French capital was the next logical step.

Waring Hopkins, director of modern art specialist Hopkins-Custot – which is located in what is likely to become Gagosian's back yard – observed to Bloomberg, "Gagosian would instantly become one of the most important dealers in Paris," and that setting up shop in Paris "would be good for Gagosian and it would be good for the city."

The market itself is only part of what makes the expansion shrewd. Gagosian can use the space in Paris to show works from contemporary artists represented by competing galleries in New York and London.

As I learned on my last two trips to the United Kingdom, there aren't many places where you can light up a cigar. Had I known about The Montague on the Gardens, I probably would have altered my travel plans a bit. The hotel bar has a dedicated outdoor cigar terrace, which for puffers, amounts to a bit of tranquility in an otherwise hostile world.

Toward the back of the hotel, like-minded guests can gather in the bar for a drink before stepping outside to a blissful smoking location with a great view of the Bedford Estate's private gardens. I tend to bring my own cigars when I travel, but sometimes like to sample the locally available fare and The Montague on the Gardens offers plenty of incentive. The bar has more than 20 brands on hand, including the coveted Cohiba Siglo VI. Smoke it gently while sipping a glass of Remy Martin Louis XIII, and you'll struggle to find a more enjoyable situation.

The hotel itself is designed to impress. It's a Georgian townhouse hotel with 101 rooms and suites – not to mention a two-bedroom apartment. This four-star establishment is within walking distance of the West End and The British Museum, and the "Type A" crowd will be happy to know it isn't far from London's Financial District.

Whatever the day's distraction is, though, return to The Montague on the Gardens and settle down for the evening with the cigar of your choice. Savor each draw, and punctuate it with your preferred spirit. Perfect.