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With the opening of the Taj Cape Town, will the city prove the broken windows theory of urban decay?

The broken windows theory of urban decay first appeared in the magazine The Atlantic in 1982. Social scientists James Q Wilson and George L Kelling proposed that little problems, such as broken windows, can soon become big ones – squatting, vandalism and violent crime.

It's been a seductive idea ever since: that fixing windows, picking up litter and scrubbing graffiti are snowflakes that can trigger an avalanche of regeneration, returning middle classes and Starbucks all round.

In South Africa's great cities, the fight is on. Johannesburg has developments in unfashionable areas, such as the boutique shops of 44 Stanley Avenue and the creative hub Arts on Main. I recently witnessed the opening of 12 Decades, the city's first "art hotel" in a renovated building deep in the urban underbelly. Each room takes a decade of Johannesburg's history as its theme; one has apartheid legislation printed in the toilet bowl.

A decade ago Cape Town city centre was seen by many as a no-go area: daylight muggings, boarded-up buildings and parking attendants on the make. More than a few windows have been repaired since then, and last weekend there was more evidence of renaissance: the opening of a five-star hotel.

The Taj Cape Town is a sister of the Taj Mahal Palace hotel in Mumbai, recently reopened after the 2008 terrorist attacks. It brings Indian decor and "refined Indian hospitality", and a spin-off of London's Bombay Brasserie, to a once unfriendly corner of the Mother City.

As in the US, city centres tend to be more dynamic, beautifully ugly and historically evocative than the safe but bland suburbs. The 177-room Taj Cape Town has plenty of ghosts, as it occupies the former premises of the South African Reserve Bank (1932) and Temple Chambers (1896), combined with a newly constructed tower.

Adapting old buildings is one short cut to character. Much of the original banking hall is intact, with its carved clock, sash windows and grand chandelier. Up high are the two balconies where minstrels entertained customers as they queued to make their deposits or withdrawals.

In the roof is a curved skylight made with scientific precision: in 1929 the architect James Morris bullied the astronomer royal into measuring the position of shadows month by month so he could maximise the amount of direct sunlight in the hall.

This was a gilded age, after all, up to a point. There are four columns that were originally meant to be made of marble imported from Sweden, but after a court case and an outcry from taxpayers, the architect settled for cheaper Portuguese Styros marble in cream and brown.

I was among American, Australian, European and Indian journalists invited to the hotel's grand opening last weekend. We had been promised an appearance by Jacob Zuma, who had been over the road at St George's Cathedral, but the president was a no-show, possibly fearful that cutting ribbons at luxury hotels would jar with striking nurses and teachers.

From a marquee, we walked up a red carpet, through the old bank's giant bronze gates and local Paarl granite facade. The crowd of faces was mainly white or Indian with a small black minority. There was a speech from Ratan Tata, the Indian tycoon whose Tata Group owns the Taj hotels, about India's affinity with South Africa and references to Gandhi and Mandela.

I stood with American and Indian journalists, musing on the significance of this Indian initiative. "There's a sense in the US that our best days are behind us," said the American. "The 20th century was the American century, but now we're in the Asian century with China and India. It looks fairly inevitable."

Among the guests was Andrew Boraine, chief executive of the Cape Town Partnership, which has led the renewal campaign. He took us on a guided tour of the immediate neighbourhood, one of the most historically rich in South Africa.

People have been living in this region for at least 70,000 years – it's one of the oldest areas of human settlement on the planet. At least two millennia ago, the Khoisan and Khoikhoi people would bring their livestock to what they called Camissa (place of sweet water).

The sun rose and the sun set and nothing changed, making it easy to pretend they were alone in the universe. Then one day the aliens came.

The Dutch East India Company set up a refreshment station and began taxing the indigenious people. And so centuries of conflict over water and land began here.

The company set up a lodge where it is believed that up to 9,000 slaves, convicts and mentally ill people were held between 1679 and 1811. The building later became the Cultural History Museum, which in apartheid terms meant white cultural history. Black culture was put in the Natural History Museum.

Just a few minutes' walk away is a public artwork that commemorates the day in 1989 when police fired a water cannon with purple dye at pro-democracy protesters so they could identify and arrest them. One demonstrator leapt on to the vehicle and seized the cannon, turning it on to the police and National Party headquarters. Later a piece of graffiti declared: "The purple shall govern."

Parliament, the 350-year-old Company's Garden, the National Gallery, the South African Museum and numerous other sites are all within walking distance. I ambled around St George's, where Desmond Tutu once rallied the faithful against apartheid, and thought myself back in England amid the carved pews, stained glass and stone effigies.

The memorials on the wall speak of brief lives: "Remember now thy creator in the days of thy youth. In memory of Adriaan Carl Johannes Bouwer, aged 16, Sunday school teacher, whose life of good promise was cut short by a fatal fall on Table Mountain, September 27th 1883, on the eve of the cathedral confirmation, September 29th. Hold up my goings in thy paths, that my footsteps slip not, Psalm 17:5."

Another reads: "In memory of Montague Treby Molesworth, lieutenant in the Royal Navy, who died on board HMS Cleopatra March 25th 1844, of spear wounds received on the 23rd in an unforeseen and general attack made by the natives of the west coast of Madagascar on the unarmed crew of the Pinnace under his command while actively engaged in weighing the anchor of their ship ...

"In this barbrous outrage, the work of two minutes, and result of a defeated attempt at theft, seven out of 13 brave men lost their lives with their gallant officer. Thus was his bright career arrested ere 24 summers had dawned upon him, yet in that brief space, he had proved himself by his prowess and presence of mind in the moment of danger all a British sailor should be."

The Taj Cape Town hotel is on Wale Street, Cape Town, South Africa.

Royal Shakespeare Theatre will open after three and a half years with major facelift, better seating and more ladies' loos

The Royal Shakespeare Theatre in Stratford-upon-Avon, whose doors have been closed for three and a half years for a £112.8m refurbishment, will reopen this November. When it does, according to the Royal Shakespeare Company's artistic director, Michael Boyd, the revamped theatre will provide "the best auditorium for performing Shakespeare anywhere".

For Shakespeare fans, the facelift is long overdue. The old theatre was locally nicknamed "the jam factory" for its industrial appearance, while an unsightly car park ruined its handsome 1930s frontage by architect Elisabeth Scott. "It was," said Rab Bennetts of Bennetts Associates, the architectural practice that has overseen the redevelopment, "a hostile building that turned its back on the town".

And that was before you got inside: some seats were as far as 37 metres away from the stage – a distance that has now halved. The "furthest seat" will remain in situ, in a spot now part of the restaurant, as a reminder of the bad old days.

Female members of the audience, in particular, will have cause to rejoice come November: the number of ladies' lavatories has increased from 19 to 47.

Best of all, the redevelopment will come in on time and on budget, according to Boyd. There is £5m yet to raise, but Vikki Heywood, the RSC's executive director, said she was confident it would come in the next five months from "individuals and charitable trusts to whom we have been talking for a while".

The new theatre, with its high running costs, will open at a time of cuts to public funding of the arts which could be as deep as 25%. Though it is recruiting for jobs with the new theatre, the RSC has frozen pay for existing staff. Boyd said he was hoping the new shop, restaurant, cafe and bar would all provide revenue.

The main theatre and the smaller stage, the Swan, will open to the public from 24 November for visits and one-off events including a version of Shakespeare's sonnets by the director Peter Brook, who created some of his most celebrated productions for the RSC between 1950 and 1970.

In February, full-scale performances will start, with revivals of Rupert Goold's production of Romeo and Juliet, and David Farr's King Lear, with Greg Hicks in the title role. At the Swan, the Irish cabaret singer Camille O'Sullivan will perform a new version of Shakespeare's poem, The Rape of Lucrece. Meanwhile, the temporary auditorium, the Courtyard Theatre, will still be up and running. Opening there in November will be a new musical, Matilda, an adaptation of the Roald Dahl story. Its book is by playwright Dennis Kelly, with lyrics and music by the comic and musician Tim Minchin.

The first large-scale new work to appear on the 1,000-seat main stage from the spring will be announced in November, when the company finalises plans for its 50th anniversary from April 2011 onwards. Aside from (of course) Shakespeare, Boyd said the company would restage some of the plays the company has commissioned over its half-century, mentioning in particular founding director Peter Hall's affinity with the late Harold Pinter.

Boyd said he thought Matilda, A Musical "might have legs, and we hope it will". A show in the West End and even on Broadway would significantly help the RSC through a period of austerity.

In addition, said Boyd, the theatre would "celebrate things that screen art cannot: the desire to witness and share a gathering of a community in real space and real time. And it achieves three dimensions in a way that Hollywood is desperately trying to achieve. We have 3D in our bones."

City council approves plans for tower only metres shorter than iconic landmark

New York's skyline, already immortalised by King Kong and Woody Allen is set to sprout another skyscraper after the city council approved plans for a tower only 18 metres (60ft) shorter than the Empire State Building.

New York city council yesterday shrugged off objections from the owners of the 102-storey Empire State Building and gave the go-ahead for the construction of 15 Penn Plaza, a 67-storey building proposed by Vornado Realty Trust.

The new skyscraper, described by Vornado as "an outstanding addition to New York's skyline", will be built two blocks away from the Empire State Building, which has stood largely unobstructed in midtown Manhattan since 1931.

Building work on 15 Penn Plaza is unlikely to begin until it finds an anchor tenant.

Malkin Holdings, co-owners of the Empire State Building, said they respected the decision of the council, which approved the construction by a vote of 47-1.

"As the current stewards of the Empire State Building, the most iconic image on the skyline of New York, we thought that 15 Penn Plaza was too close to the Empire State Building for its height and design," said the company president, Anthony Malkin.

New York's mayor, Michael Bloomberg, had dismissed objections to the building.

"Anybody that builds a building in New York City changes its skyline. We don't have to run around to every other owner and apologise," he told a news conference on Tuesday.

"One guy owns a building and he'd like to have it be the only tall building. I'm sorry, that's not the real world."

David Greenbaum, the project developer for 15 Penn Plaza, told New York city council's zoning committee that the tower's height was determined by the needs of potential tenants – such as financial services firms that need large, uninterrupted floors to accommodate trading activities – as well as the additional space needed for "green" office design.

Vornado said the project would bring transport improvements, including a concourse linking Penn station to subways and commuter trains, new subway entrances and an expanded subway platform.

Penn Plaza will be 363 metres (1,190ft) tall. The Empire State Building's main structure is 381 metres but it has a 62 metre antenna that puts its total height at 443 metres.

Mitchell Moss, a New York University urban policy professor and an informal adviser to the mayor, told the New York Times that the city had long cherished its soaring towers.

"People don't come to New York to visit caves," Moss said. "They want the views, the height, the experience of tall buildings. Skyscrapers allow us to make the best use of a limited amount of land."

The Empire State Building won its place in popular culture in the 1933 film King Kong, when a giant, love-sick ape climbed the skyscraper, Fay Wray clutched in his paw, only to fall to earth in a hail of bullets from a bi-plane.

It was the city's tallest building until the construction of the World Trade Centre in 1970. After the twin towers were destroyed in the September 11 attacks, the Empire State Building again held the title of New York's tallest building, but will lose it when One World Trade Centre is completed.

City takes out legal action over ownership of Jacob Wrey Mould's landmark designs found in a skip 50 years ago

At some point in the 1950s a craftsman called Buckley was working on a site in lower Manhattan when he came across a stash of papers dumped in a skip. They were a set of architectural drawings in watercolours of plans for city parks including details of fountains, clocks, terraces and other structures.

What probably caught Buckley's eye was the stately nature of the designs and their elaborate colouring. Recognising their innate value, he took a pile of more than 100 of the drawings home and filed them away for safe keeping.

More than 50 years later they have become the subject of a $1m (£640,000) lawsuit lodged at the New York supreme court. The legal action was brought by the city's authorities against the late craftsman's son, Sam Buckley, and Christie's, the auctioneers through whom he tried to sell the drawings.

They were the work of Jacob Wrey Mould, a British architect who came to New York in 1853 to design a Unitarian church in Fourth Avenue and 20th Street. Though the building has long been pulled down, in its day it was quite a sensation with its striped facade of red and cream stone earning it the nickname Church of the Holy Zebra.

Mould, an irascible man who was not much liked but greatly admired, went on to collaborate with Calvert Vaux, co-designer of Central Park. Together they planned the original buildings of the American Museum of Natural History and the Metropolitan Museum of Art, while Mould also had a large hand in Belvedere Castle and the carvings of the Bethesda Terrace, both in Central Park. Later, he was seminal in the creation of other quintessential New York features such as Morningside and Riverside Parks.

Most of the drawings were signed by Mould. They display his love of vibrant colours as a student of the designer and polychrome theorist Owen Jones with whom he designed a room in Buckingham Palace. They include plans for structures that were built, such as Bethesda Fountain, as well as ones that were not – a set of street lamps for Park Avenue, for instance.

Every one was stamped with the badge of the New York Parks Department, for whom Mould worked from 1857 to shortly before his death in 1886.

When Christie's was commissioned by the younger Buckley to sell 86 of the 127 drawings in his late father's possession, the auction house contacted the city authorities for help with valuing the works and to ask whether New York wanted the first chance to buy them.

But the city saw an invaluable historic collection that should never have left its public ownership.

"They are the kind of thing we would never throw away, but for whatever reason they were erroneously discarded or lost," said Gerald Singleton, the lawyer representing the city. "Once we looked at them we realised that the city remains the owner of these drawings."

It has persuaded the New York court to put a preliminary restraining order that prevents Buckley or Christie's from selling any of the drawings.

In return, the city has promised to back off from its legal threats and to attempt to reach a settlement.

"We're confident this will end amicably," Singleton said.

If New York regains the drawings, it has pledged to use them when renovating historic parts of the city.

Lucille Gordon, Mould's biographer, said the documents were also hugely important in the understanding of the architect himself. "He is a piece of our history – his work is scattered all over New York state. Yet so few papers of any kind have been left behind, and any scrap that Mould touched has a value."

Jacob Wrey Mould

Born 1825 in Bloomsbury in London, and educated at King's College School.

Studied under Owen Jones, the so-called master of polychromy, travelling to the Alhambra in Spain.

Took part in the building of Dorchester House on Park Lane and in the Great Exhibition in London in 1851, moving to New York soon afterwards.

Started work with the city's park department in 1857, rising by 1870 to be its architect-in-chief.

Apart from a five-year stint in Lima in Peru from 1874, he spent most of his later life working for the New York parks.

Also renowned as a distinguished pianist and organist.

The 42-storey building in Elephant & Castle was nominated for its 'plain visual grotesqueness' and 'Philishave stylings'

It was hailed a breakthrough in urban wind power: a 42-storey tower with built-in turbines to deliver 8% of its electricity needs. But today the Strata tower in south London found itself becalmed when it was named Britain's ugliest new building, pipping a rival that the judges said resembled a giant pair of buttocks and a bus station that looked like a jelly mould.

Justin Black, the director of the developer Brookfield had already admitted: "It's what I term Marmite architecture – you either love it or you hate it." And sure enough the judges of the Carbuncle Cup, architecture's least sought after prize, opted for the latter.

"Decked out with Philishave stylings, this is a building that appears to be auditioning for a supporting role in a James Bond title sequence," said Ellis Woodman of Building Design, the trade newspaper which organised the prize.

The building was nominated by The Georgian Group for its "plain visual grotesqueness". Adam Jones, another nominator, said: "I used to live in south London and moved partly because — and I'm not joking — the Strata tower made me feel ill and I had to see it every day."

The dubious honour, now in its fifth year, is intended as an antidote to the Royal Institute of British Architect's Stirling Prize for the best building and has attracted growing levels of interest. Design critic Stephen Bayley said it "attracts a far higher level of intelligent participation than the Stirling prize".

Thirty-one buildings were nominated by readers "united in their often poetic expressions of outrage", said Woodman. The shortlisted Cube office development in Birmingham was described by its nominator as like "a lumpy beige ornament your father buys your mother for her birthday because he thinks it's classy, whereas she can see it for the tat it is".

For the winner, there was the difficult question of how to react. Robert Torday, the marketing director of the apparently unamused architects of the scheme, BFLS, declined to comment.

And not everyone is sure the award is a good thing.

"Labelling one architect with having produced the worst building of the year without mention of the client, developer or contractor means giving the architect a massive kicking when they are very rarely the sole author of the project," said Charles Holland, director of FAT Architecture. "Nothing wrong with robust criticism, but laughing at other people's mistakes is never an edifying spectacle."

Heritage boss Shan Jixiang says frenetic development is wasting resources and razing valuable city centre districts to make way for 'superficial' skyscrapers

Frenetic development has been a disaster for conservation, wasted huge amounts of building materials and produced boring cityscapes, China's top cultural heritage official has said.

"Bulldozers have razed many historical blocks," Shan Jixiang said this week. "The protection of cultural heritage in China has entered the most difficult, grave and critical period."

The outspoken remarks from Shan, head of the state administration for cultural heritage, echo growing concern about the destruction of buildings which date back centuries.

"Much traditional architecture that could have been passed down for generations as the most valuable memories of a city has been relentlessly torn down," he said. He warned that without support, much of China's heritage would be extinguished.

The China Daily reported that in Beijing alone, 4.43m square metres (1,100 acres) of old courtyards had been demolished since 1990 – equivalent to around 40% of the downtown area.

Another planned development will require razing large swaths of land around the capital's Drum and Bell towers, until now a largely untouched district.

While many residents want improved housing, complaining about dilapidated buildings and shared public bathrooms, campaigners say it is possible to upgrade traditional homes instead of simply knocking them down.

Shan warned that small and medium-sized cities were throwing up high-rises and skyscrapers in a bid to imitate metropolises, rendering too many cityscapes "rigid, superficial and dull".

He also said many buildings had been demolished while they were still usable, adding: "That is a disaster for both the environment and resources."

According to China Daily, the average Chinese building lasts 30 years – compared to 74 years for those in the US and 132 years for British construction.

Last year, cultural heritage officials warned that urban development had destroyed tens of thousands of historic sites in the past three decades.

In 2007, the vice-minister of construction launched a similar attack on the "senseless actions" of officials who knocked down precious sites and cultural relics to produce identikit cities. His criticisms have had little, if any, effect on the drive to redevelop cities.

Tehran looks to escape association with SAS and 1980 siege by building contemporary structure with emphasis on culture

Iran is attempting to reinvent its reputation in the UK by building an embassy building in central London featuring a contemporary art gallery and cultural centre.

The Iranian foreign ministry has submitted a planning application for the six-storey building on a South Kensington street corner, featuring a dramatic cantilevered arch, acutely-angled walls and irregularly punched-out windows, a recent architectural vogue. Its architect believes the building, which will cost at least £100m and is sited in a sensitive area of historic buildings, will embody "Iran's public image in London".

The site, which is just a short walk from the Natural History museum and the Royal Albert Hall, marks a radical departure from the Iranian's ambassador's current headquarters in a converted town house on nearby Prince's Gate, scene of the infamous 1980 terrorist siege that was ended dramatically by the SAS.

"The cube-shaped building at the corner could be accessed freely by the public and feature exhibits such as contemporary artworks made by young Iranian artists," said Armin Daneshgar, the Vienna-based Iranian architect who is working with a leading UK environmental engineer, Battle McCarthy, to make the building sustainable.

"We believe Iran's rich cultures, especially contemporary movements, are still largely unknown to the west."

The plans for the new embassy building invite comparison with plans by Tehran's great enemy, the US government, which is spending more than £1bn on a new UK outpost on a vacant site in Wandsworth, well away from the traditional London embassy districts.

When designs were unveiled earlier this year, showing a tall glass and steel cube with a lake on one side and a ha-ha on the other, the state department's architect, James Timberlake of the firm Kieran Timberlake, said it would be "a beacon of democracy – light-filled and light-emitting". Critics said it was a modern "fortress", more like the Tower of London.

Diplomatic relations between London and Tehran remain fraught. Last month, there was an international outcry at Iran's intention to stone to death a woman for alleged adultery. The sentence was commuted to hanging last week. European Union countries have also recently toughened sanctions in an effort to block President Mahmoud Ahmadinejad's controversial nuclear programme.

Meanwhile, the Iranians' architectural ambitions are already facing problems. Local residents have decried the scheme as "like a spaceship", "an eyesore out of keeping with the rest of the area", "catastrophic" and "hideous".

A group of concerned residents has even asked Prince Charles to object to the designs, which represents the sternest test yet of the prince's willingness to keep out of public planning matters since a high court judge in June described his opposition to a £3bn redevelopment plan for Chelsea barracks as "unwelcome".

John Edward Howes, a resident of 83-85 Queen's Gate, opposite the site, wrote to the prince, saying the design was "out of character" with the surrounding conservation area and appealed to Charles's family heritage by drawing attention to "Prince Albert's grand plan" for the neighbourhood, the Mail on Sunday reported.

A spokesman for Clarence House said the prince has not made any intervention at this point.

Neighbouring homeowners have also accused Tehran and the Royal Borough of Kensington and Chelsea of being overly secretive about the designs and complain they have not been allowed sufficient time to comment.

"We have been in touch with the council and they say we have to turn up at the planning office with photo identification to see anything," said Ian Dungavell, director of the Victorian Society, who complained images should have been posted online as is now usual for planning authorities.

"People need to know how tall it is, how it fits in the area and they need to have a reasonable amount of time to respond. If local people feel a fast one is being pulled, they are going to be alienated from the entire process."

The council said it withheld images of the scheme from its planning website at the request of the police's diplomatic protection group, who were concerned about security issues. In response to criticism over the past few days, it has posted a limited number of renderings which show the striking building in context.

Today, Paul Finch, chairman of the Commission for Architecture and the Built Environment, the government's design watchdog, praised what he had seen of Iran's design. "The building seems to be a statement that they are a contemporary culture rather than utterly traditionalist and its rather surprising and refreshing in that sense," he said.

"It has been designed to be part of the city rather than a standalone building, such as the US embassy, which can't be part of the city because there is no such urban fabric where it is being planned."

A planning decision on the Iranian embassy is due in early September, a spokesman for the Royal Borough of Kensington and Chelsea said. No one from the Iranian embassy was available to comment.

London's Strata Tower and Robert Burns memorial in Kilmarnock among six buildings in running for dubious honour

Six buildings have been chosen for an award that highlights the worst examples of architecture in the UK. The Carbuncle Cup, run by Building Design, aims to draw attention to buildings constructed in the last 12 months that most offend the aesthetic sensibilities of passersby.

Over 30 suggestions were received, but the list was whittled down to six and published to coincide with today's announcement of nominees for the 2010 Stirling Prize for architecture.

Two London buildings feature in the shortlist, the first of which is Strata Tower in Elephant and Castle, the first skyscraper to have wind turbines built into its design. The building's design has divided critics and locals, earned the nickname the Electric Razor, and was recently described by the Guardian critic Jonathan Glancey as a "sleek silver sentinel".

The Georgian Group – which campaigns for Georgian-inspired architecture – described London's tallest residential building, at 147 metres, as "pure visual grotesqueness" when it submitted it for consideration.

The second building nominated in the capital was the Bézier Apartments, near Old Street, which was accused of being shaped like a bum. Birmingham's The Cube, a 23-floor building with a glass-panelled roof, was put forward because of its "clunky windows", "inelegant vents" and gold colour, which was meant as a nod to its location in the city's jewellery quarter.

The memorial centre for the Scottish poet Robert Burns in Kilmarnock, the St Anne's Square development in Belfast and the Haymarket Hub in Newcastle also made the list.

Last year the prize went to Liverpool Ferry Terminal. Its ugliness was thought to be award winning because it was argued that it blighted a world heritage site.

The Carbuncle Cup judge Ellis Woodman, deputy editor of Building Design magazine, said: "I would like to think that this might be a good opportunity to reconsider what was built in the in the last building boom.

"These buildings could have been so much better if there had been better levels of consultation in the planning process."

The six buildings on the shortlist will be considered by a panel of expert judges in consultation with architects and local residents.

The winner of the Carbuncle Cup will be announced on August 27.

The prize takes its name from a 1984 speech by Prince Charles, well known for his support for traditional architecture, in which he described a proposed extension to the National Gallery as a "monstrous carbuncle".

The British-Iraqi designer was nominated for her museum of 21st century art in Rome

Zaha Hadid, the Iraq-born British architect whose avant garde designs have struggled to win acceptance in the UK, was last night tipped as the favourite to win the country's top architecture award for a sinuous museum of 21st century art in Rome that the Royal Institute of British Architects regards as her best building yet.

The designer of the €150m MAXXI museum will vie for the Stirling Prize with a €200m reworking of the Neues Museum in Berlin, by David Chipperfield, another British architect who has struggled to win major commissions in his home country. Two schools, a project to double the size of the Ashmolean museum in Oxford and a home and office development in east London make up the remainder of the shortlist for the £20,000 prize which is awarded to the architect of the best new European building built or designed in the UK.

The bookmaker William Hill has Hadid as evens favourite, followed by Rick Mather at 5/1 for the £62m Ashmolean project and Chipperfield at 11/2.

Hadid, 59, is widely recognised as one of the world's leading architects, but is yet to complete a major building in the UK. Her first is set to be the London 2012 Olympic swimming pool and diving centre.

The Stirling shortlist also highlights the quality of school buildings completed prior to the deep cuts to the education budget. Architects last night seized on the naming of two schools for the first time in the award's 15-year history as evidence the government should continue to recognise the value of good design.

The £2.5m Clapham Manor primary school in south London designed by the firm of De Rijke Marsh Morgan and a £14.4m addition to Christ's College school in Guildford by DSDHA will challenge the more expensive arts projects when the prize is announced in October. The move comes after Michael Gove, the education secretary, announced the scrapping of the £55bn Building Schools for the Future (BSF) programme.

"They represent what all schools should be: light, well-laid-out and well-equipped environments in which all students can flourish," said Ruth Reed, president of the RIBA which runs the award. "Investment in well designed schools demonstrates to teachers and pupils how much they are valued and has measurable impact – attendance and results rise; truancy and bullying fall. With the programme to improve our extremely poor school estate now much reduced it could be some time before we see such exemplar school buildings on the Stirling shortlist again."

"If you engage good architects you get social value and community value that goes beyond the bottom line and has a more persistent legacy," added Deborah Saunt, a partner in DSDHA. "This is not about cost. Our school came in at less per square metre – £1,960 – than a typical school under the BSF programme, which cost around £2,400 per square metre."

Neither school on the shortlist was designed under the BSF initiative, which aimed to rebuild or refurbish most of the nation's secondary schools. Saunt added that BSF's "industrial production of schools is not something that has proven to produce quality yet".

"There have been a lot of commercial architecture practices churning out schools and not giving them the attention they deserve," she said. The smallest project on the shortlist is a £1.6m home and office building in Shoreditch, east London, designed by Theis and Khan Architects.

Manchester's magnificent Grade II listed London Road fire station, currently empty and decaying, looks like being granted a reprieve. Completed in 1906, the fire station once housed flats for 38 officers and their families, as well as a library, bank, stables, gymnasium, police station and court. Now, after almost a decade on the national buildings "at risk" register, owners the Britannia group have lodged a planning application to convert it into a 227-room luxury hotel, maintaining and restoring many of the building's original features. The engine sheds will become function rooms, the police station will be a bar – with booths in the cells. The original firemen's poles, which took the men straight from their living rooms into the engine sheds, are being kept, and will feature in many of the bedrooms. Most inventive of all, the coroner's court, used for an inquest as recently as 1998, will become a wedding venue. "Once the work is complete, it will be the first time in more than 20 years that the public will be able to go inside," said an exultant Alex Baldwin, conservation adviser for the Victorian Society, which has been keeping an anxious eye on the London Road site for a number of years.