Istanbul's year as European capital of culture ended last December much as it had started, disregarded by a city too huge to really come to grips with the event. The 600 exhibitions, concerts and attractions certainly stimulated artistic creation, speeding up the launch of museums and galleries, and positioning the city on the global arts scene. "Istanbul has been revitalised. And we welcomed 8 million tourists," boasts Kadir Topbas, the leader of the urban area council.

But despite investments of almost $3bn, most of the population hardly noticed. "We maybe failed to reach everyone, but Istanbul is the size of a small country," Topbas admits. A large share of funding was spent on restoring old buildings and the rest vanished into the maze of bureaucracy.

Symbolically, the final straw for the capital of culture came one evening last September when youths invaded several contemporary art galleries in the Tophane district, wielding clubs and iron bars, smashing plate glass and threatening guests at an opening. The incident reflected the resentment of local people who accused fashionable artists of consuming alcohol in public and encouraging the gentrification of the city centre.

The violence reveals the deep contradictions running through Istanbul, a world in itself consisting of countless little villages, "part global, part local", according to Caglar Keyder, an urban planner at Bogazici University. It has all the problems of a city that has expanded too fast, with little or no control over its development. "Istanbul is a chaotic city, now ungovernable because it has turned into a commodity. Cultural values have been sacrificed for the sake of financial profit," says Mustafa Sönmez, a columnist on the daily Cumhuriyet.

With unbridled growth and an influx of people from the countryside looking for work, Istanbul is pushing at its limits; it now extends 100km, from east to west. The population has risen from 4 million in the 1980s to almost 15 million (a fifth of Turkey's total population), and the city accounts for almost half the country's wealth.

Whole new neighbourhoods have been built in just a few months. The papers are full of adverts for projects on the outskirts. Some 40km from the Bosphorus a concrete replica of the straits is being built on the European side of the conurbation. Bosphorus City, much as dozens of similar projects here, targets young urbanites. The new quarter has a bridge, kitsch Ottoman villas imitating the traditional wooden yali and the inevitable fish restaurants. "Our idea is to recreate life on the shoreline, but at a more affordable price," says one of the sales team.

There is no sign of the sea but a motorway runs nearby and a subway line is due to be built soon. It took just 10 days to sell the 300 flats overlooking an artificial canal, with a two-room unit fetching $160,000. Caught up in a frenzy of property speculation prices have soared, lining the pockets of big contractors close to the government.

Five years ago the Ataturk Olympic stadium was surrounded by fields. Now there are tower blocks and condominiums. The hills used to be sprinkled with small hamlets, consisting of gecekondu, the unplanned shacks that sprang up with each new wave of migrants. Most of their occupants, country folk from Anatolia, have been rehoused or evicted.

The priority for the city council is transport and infrastructure, with investments exceeding $5bn. The traffic in the narrow streets of the city centre is a nightmare, so the authorities are building a subway system and adding ferries, as well as a metrobus service to bring the suburbs closer.

A third bridge is going to be built over the Bosphorus, in addition to the Marmaray rail tunnel under the straits. A third airport is also in the pipeline. Motorways, shopping centres, hospitals, mosques and universities are going up on all sides. Topbas, who trained as an architect, has changed the face of Istanbul.

But the programme of urban transformation drawn up and pushed through by the city council faces increasing opposition. The historic peninsula, where the main Byzantine and Ottoman buildings are located, has degenerated into a soulless theme park. "It is more profitable for Istanbul," Topbas counters.

The Sulukule district, at the foot of the wall that ringed ancient Constantinople, has borne the brunt of this approach. The Roma community, which settled here several centuries ago, was ousted and the land, which has increased in value fivefold, has been sold to developers. The same process is under way in Tarlabasi, a Kurdish enclave in the middle of the city, with historic buildings being renovated and sold for huge sums.

New housing is being built on the outskirts, and in the Maslak business district, to the north of the centre, steel and glass tower blocks are shooting up. Meanwhile, the Turkish government plans to move the country's financial hub to a "green city" at Atasehir, in a primarily residential part of Istanbul.

Much of this frantic development is illegal. Few contractors comply with building standards: two-thirds of recent housing breaks the law in one way or another. For example, the vast shopping mall, which opened last year in the Istiklal pedestrian precinct, has four more storeys than was originally planned.

In the event of a quake these buildings could cause large-scale destruction. Istanbul stands on an anxiously monitored fault line and there are widespread fears of a major earthquake. But for its next big scheme the council plans to address the problem. "We want to take the risk of a tremor and use it as an opportunity to renovate Istanbul," says Topbas. Turkey's big construction groups are delighted.

This article originally appeared in Le Monde

• This article was amended on 22 February 2011 to correct the population of Istanbul.