"Home to the London College of Fashion, a throbbing art scene and some of the most thrilling drama of the recent riots, this sexy ghetto is fast becoming the beating heart of London style."

So says the spoof website for the Hackney Haute Quarter, where a map of the east London borough is rapidly splattered with the logos of Fendi and Hermes, Louis Vuitton and Dolce & Gabbana, gradually covering the area like an invasive fungus of luxury brands.

"Already boasting Burberry, Pringle and Aquascutum outlets, acquisitions are lined up for a wealth of sassy new stores to spring up soon. This is an opportunity for the most daring brands in fashion to build on the area's antisocial capital."

It would be funny if it wasn't so close to the truth. Designs have just been unveiled for the £100m Hackney Fashion Hub, by architect David Adjaye, to transform this part of Hackney Central into a mecca for luxury shopping – using £2m from the GLA's post-riot regeneration fund. It is a strange logic that sees the answer to people smashing up shopfronts as the provision of more shopfronts to smash.

Backed by the Manhattan Loft Corporation – developer of the multimillion pound St Pancras Chambers apartments and "London's sexiest new skyscraper" in Stratford – along with £3.3m from Network Rail, the project builds on a plan by Hackney council to transform this neglected part of the borough into a thriving retail hub.

Mooted in the euphoric buildup to the Olympics, when every inch of the "Olympic fringe" was trying to cash in on the global mega-event by branding itself as an edgy creative quarter, the fashion hub seemed like a naive pipedream. Surely it could never happen here, where fortress-like council blocks loom over fried chicken shops and discount furniture stores. Yet armies of Chinese tourists, eagerly clutching branded bags, elbowing their way back on to coaches, have now become a frequent sight.

The former Duke of Wellington pub, now home to a Pringle outlet, will be demolished to make way for the new commercial centre. Photograph: Oliver Wainwright

Such organised shopping tours, along with baffled visitors clutching their A-Zs, are an increasingly common phenomenon at the junction of Morning Lane and Chatham place, the nexus of this nascent fashion village, where east Asian bargain-hunters are bussed to snap up end-of-line discounts from the finest British labels. The developers hope it will be London's answer to Bicester Outlet Village – which had 5.5 million visitors last year, two-thirds from outside the UK – and declare it is "the East End's answer to Carnaby Street".

Last autumn The Duke of Wellington pub was converted into a swish factory outlet for Pringle, while the warehouse over the road – the former gravel pit chapel where Joseph Priestley, who discovered oxygen, preached – has been transformed into an unlikely home for Aquascutum.

But both of these historic structures will be swept aside by Adjaye's designs for 7,000 square metres of new retail space in two five- and seven-storey buildings, along with plans to transform a dozen railway arches over the road. "The buildings will create a light-filled, compelling environment that captures Hackney's creative energy, gives local residents a sense of pride in their built environment and provides an exciting new draw for visitors," says Adjaye, who first developed his slick, stealthy style in the borough with the Dirty House for artists Tim Noble and Sue Webster, and the Sunken House.

Also penned for demolition: the former gravel pit chapel where Joseph Priestley preached, now Aquascutum. Photograph: Oliver Wainwright

But local business owners are not convinced. "These shops aren't for local people," says mechanic Ali Kurt, who has run Elite Motors out of one of the railway arches for the past 10 years. "Most of us couldn't even afford to buy a tissue from one of those outlets, and the new parking restrictions mean that businesses and residents are suffering."

Kurt says he is lucky to still have his premises, while most of the neighbouring mechanics have been driven out. Resident Luke Muziwa is equally concerned: "I did my apprenticeship at the MOT station in Morning Lane when no one else was willing to give me a chance and it pains me to see how they were treated," he commented on the Hackney Citizen site. "They where all evicted without being offered a place to relocate to or any funding towards starting again elsewhere. How can people's livelihoods be taken away because of shopfronts, especially in these economic times?"

The arrival of the fashion hub comes hand-in-hand with high-end residential development: the former Burberry factory, next to the outlet store, is being converted into luxury apartments, now dubbed the Textile Building. "This is the definition of urban living," proclaims the billboard, while a cloth-bound brochure lavishly depicts two- and three-bedroom flats, on sale for between £325,000 and £485,000, which "recall the classic loft apartments of Bohemian midtown Manhattan". A brief glance at the floor plans shows the spaces are a good deal meaner than the Parker Morris council flats over the road.

It may be futile to rail against an inevitable process of post-riot gentrification, which has happened time and time again across London. As one local shopkeeper, who is in the process of being relocated by the development, cheerily comments: "It happened in Brixton and it happened in Tottenham. Whenever poor black people smash things up, rich white people come and buy the houses."

Hackney council has vowed that half of the 400 planned new jobs will be for local people, and it is setting up a training programme in fashion and retail to help local candidates gain the experience and skills required to "sell someone a trenchcoat for £1,000", as one local cafe owner put it. The fashion hub will also include studio space for local designers – but it is little consolation, when such designers are already being priced out of the area and are further threatened by the change in planning law making it easier to convert office space into residential housing.

Most of all, it seems strange that a pot of public money, set aside specifically for areas affected by the riots, should be spent on lubricating the path for a wealthy private developer to transform one of the most deprived parts of London into something very much like a duty-free shopping lounge.

• The Hackney Fashion Hub proposals will be on display for public feedback at two drop-in consultation sessions this week:

Wed 13 March, 2pm–7.30pm

Trelawney Estate Community Hall, Belsham Street, E9 6PQ

Thur 14 March, 2pm–7pm

St Luke's Church, Woodbine Terrace, E9 6RT