"Welcome to the Penh my friend, big city in the kingdom of wonder, where all the streets are numbered and when it rains it thunders, them smiles stay infectious, chaps asleep in their cyclos or pushing a Lexus."

Thus rhymes artist Grant Massey in his ode to the Cambodian capital. Massey hails from Leicester and is one half of the Phnom Penh-based hip-hop duo Gobshite and Prolyfik (yes, you read it right - that's Gobshite!). The other half is Chally Dang, a young Khmer who recently returned to Phnom Penh from Philadelphia, to bring, as he says, true hip-hop to Cambodia.

Their timing is just right. Cambodia's riverside capital is on the rebound. After little more than a decade of peace following 40 years of war, the city of two million is recapturing some of its early 20th-century flair. Foreign visitors drawn to Cambodia by its ancient monuments are discovering a thriving contemporary cultural scene with arts cafes, clubs and galleries springing up all over town.

Meta House (meta-house.com), a large art gallery, rooftop cinema and restaurant housed in a gleaming white 500 sq m space in the heart of the city, has been at the forefront of raising the profile of Cambodia's contemporary artists.

"The contemporary arts and music scene really kicked off five years ago," says Nico Mesterharm, founder of Meta House. "Since then we have had more than a 100 exhibitions presenting contemporary Khmer art."

Java Cafe gallery

Down the road from Meta House, Java Cafe (javaarts.org) serves as both cafe and gallery and presents equally interesting artists, such as Mao Soviet, who is currently showing Cloudy and Loud, a light sculpture exhibition created in collaboration with American artist Arnoldo Hurtado, in which the idea of illuminating (both physically and metaphorically) is explored (until 13 May). The fact that Java Cafe turned from a non-profit setup into a business in 2008 is an indicator of the increasing bankability of Cambodian artists.

Just as fascinating, though more specialised, is Bophana (bophana.org), an audio-visual centre set up by renowned Cambodian film director Rithy Phan to archive images and sounds of the Cambodian memory. Rare Cambodian films such as Kou Oy Chok Chheam (Painfulness), made in 1966, are showing throughout April.

And there's more. Take a walk down Street 178, behind the National Museum, a road once lined with shops exclusively selling garish depictions of Angkor Wat, and you'll find a number of new art galleries showcasing emerging local artists. One of the country's best known is Em Riem who runs La Galleria. The 34-year-old artist, who was born and raised in the Cambodian countryside until the age of 15 and experienced the Khmer Rouge period with his family, has had his work shown in the US, in Colombia, France, Hong Kong and London.

The artistic community's work has tended to draw heavily on the Khmer Rouge period, but subject matters are changing. Sa Sa Art (sasaart.info) gallery on Street 360 is run by a group called Stiev Selapak – the art rebels – who are currently working on The White Night, a community art project with the residents of The White Building, an infamous slum landmark in the Cambodian capital.

White Mansion Hotel

Em Riem, too, is broadening his artistic horizon, moving away from the country's dark history to help redesign the former US Embassy, now the smart boutique White Mansion Hotel (rooms from £51), which offers huge rooms and an attractive blend of Khmer designs, harking back to the 1,000-year-old Angkor era architecture. Riem's work – his own brand of modernist furniture and sculpture infused with historic Khmer characteristics – is exhibited in the hotel's lobby and suites.

Phnom Penh's music scene has also been given a serious shot in the arm by an influx of young foreigners and Cambodians who grew up outside the country, mixing it up with local artists. In 2002, Hollywood actor Matt Dillon shot City of Ghosts, an affectionate, dark portrait of post-war Phnom Penh. The movie's soundtrack featured music from the 1960s – Khmer rock'n'roll. Most of the artists of the period were killed by the Khmer Rouge and it's only now that the country's pop cultural heritage is enjoying a resurgence.

For the past couple of years, The Cambodian Space Project, a rock band founded by the charismatic female singer Srey Thy and Australian band leader Julien Poulson, have taken their reinterpretations of the country's 1960s sound around the world – the band have just returned to Cambodia from their second tour of Australia and have also performed in the US, Europe, Hong Kong and China in the last two years. Visitors to Phnom Penh might be lucky and catch them at music venues such as the French-managed balcony bar-cum-exhibition space Equinox (equinox-cambodia.com) or Mao's Pub (facebook.com/maoscambodia), a new nightclub located near Wat Phnom on the city's riverfront.

The Cambodian capital is beginning to host larger events too. In February, Preap Sovath, the nation's biggest superstar, performed live in the city's historic railway station. The 36-year-old collaborated with several foreign artists, as part of the second Tiger Translate art and music festival. Preap sent his favourite songs to British reggae-popsters Will and The People and several other bands, who performed with the heartthrob crooner in front of a 2,000-strong crowd.

Tiger Translate Phnom Penh – one of a global series of events designed to give Asian artists a platform, while offering them opportunities to work with western creatives – is indicative of the Cambodian capital's flirtation with contemporary cosmopolitan flair. In its own unique way, the "Pearl of Asia" is coming of age once more.