Lapping at the Lake

The life cycle of entertainment districts is predictable. A low-rent part of town today becomes tomorrow's buzzy dining and drinking destination. Serious investors show up, as do smarter restaurants, and before long the area is overrun with bistros and martini bars. Scenemakers then latch on to another low-rent part of town—and the cycle begins again.

Visitors to Beijing will notice that the Chinese capital seems to have gone through just this of late, with formerly trendy Sanlitun giving way to the lakeside neighborhood of Houhai as the city's favored leisure zone. While Sanlitun degenerates into a...