The new cast of neighbours: Why the bling brigade is flocking to a former asylum in north London

The minute I walk into the show flat at Princess Park Manor in Friern Barnet, North London, it becomes instantly apparent who these places are aimed at. Only the word "bling" seems to do justice to the overblown décor, while the duplex bedrooms seem to positively invite wild partying, even though it's 2pm on a cold Sunday afternoon.

It's as if Princess Park Manor is selling a pop star fantasy life. And in recent years it's this proliferation of C-list celebrities that the building has become widely known for. X Factor and boyband fans will be in their element: a tabloid favourite singer and talent show judge owns a flat here, three members of the boyband, One Direction, started renting a home last year too.

Other neighbours include members of JLS, another X Factor boyband and members of The Wanted. Girls Aloud used to store their hair straighteners at Princess Park Manor. Cheryl and Ashley Cole courted here and lived together in a flat before their marriage. Ashley is said to have cheated on Cheryl with a hairdresser in a friend's flat in the building in 2007.

"There are a number of different celebrities who live here and have lived here," says Brian Comer. But it's not just the Chinawhite brigade. He adds: "The demographic on site ranges from young professional workers in the City to workers from fields of the arts, music and sport – all of which gives a fresh and active vibe to the development."

Princess Park Manor is back in the news right now because its latest – and final – parcel of flats have been put on sale. Phase six of the development features 19 flats – a pair of three bedroom penthouses and 17 two-bed flats. Six have been sold so far, leaving 13 still on the market, with a starting price of £349,000 for an 845sq-ft flat.

The extravagantly decorated show flat that Brian's affable daughter Jessica leads me around is a capacious 1,586sq-ft and it's on for £649,000.

Jessica tells me her latest buyers were not even celebs but "a couple who both work in the City".

The latest phase of the development comprises a new block glued onto the side of the old building. It was constructed from a similar type of buttery stone to give the sense of visual continuity with the rest of the – much older – edifice. "Each [new] apartment has been individually designed to the highest standards giving every resident luxury surroundings," notes Brian Comer.

For Comer and his team, this has been a grand project. They bought the building when it was nearly derelict and now manage all aspects of the development. Ground rent is £500 a year and service charges are from £3,279 up to £3,726.

"The building is set in 30 acres of mature parkland, which gives a regal feeling to the development," says Comer, when I ask him what he's most proud of. He also adds: "The expert craftsmanship in the refurbishment of the building inside each apartment – and the restoration of the elegant façade of the building itself."

Comer, along with brother Luke – both of whom started out as plasterers in the west of Ireland – have transformed other grand-scale buildings into homes. Amongst their projects, they developed the former Royal Masonic School For Boys in Bushey, Hertfordshire, into the Royal Connaught Park flats. But here in Friern Barnet, cheek by jowl with the rumble of intercity trains zooming up and down the East Coast Mainline, they found their biggest challenge.

For Princess Park Manor has a dark and secret past – one which makes it all the more surprising that the address has become desirable today. Before its re-branding and redevelopment, the building had a sinister former life. It was, from 1851 until 1993, one of the main psychiatric hospitals of London, its name saying much about changing attitudes: it was called Colney Hatch Lunatic Asylum and was for a time the largest such hospital in Europe.

The foundation stone of the fine Italianate building was laid by Prince Albert and in the spirit of Victorian civic virtue the new asylum was designed to improve the lot of the "pauper lunatics". Unfortunately overcrowding, a lack of resources, poor upkeep of the building and a fear of the sometimes cruel methods of treatment that lay inside ran the reputation of the hospital into the ground. A devastating fire in 1903 killed 51 patients and by the 1990s the hospital was facing severe funding difficulties. That said, some protested against its closure, which came at time when Thatcherite "care in the community" policies saw patients suffering from mental illnesses sent to live alone and institutions – like this one – closed.

"The hospital eventually closed in 1993 and the refurbishment started in 1995," says Comer. He also explains a spooky secret: "There's a secret tunnel from New Southgate train station to the building – it was used in case any famous politicians or royalty were brought in as patients."

I look up at the original beams and stained glass windows in the building's chapel, which is now incongruously used as the on-site gym and imagine the all-consuming thirst for a cure to their problems – and to their incarceration – that the assembled flock must have prayed so hard for on those harsh Victorian mornings.

Nowadays people don't seek to escape from, but to move here. Foxtons has a three bedroom apartment in the old part of the building for £1.19m, while above the chapel, the biggest flat – a three bedroom pad in the central dome – costs a cool £2.5m.

Celebrity homes: when stars stick together

Beetham Tower is Manchester's glitziest address. The footballer Phil Neville put the flat in which he lived on the market in 2010 for £4m, then dropped the asking price by £250,000 last year. It was still Manchester's most expensive flat. His brother Gary is said to own a flat in the block, likewise and The X Factor winner Shayne Ward was thought to have bought a flat there.

The leafy side streets in Kensal Rise, west London, have a high concentration of property recently owned (or recently lived in) by stars including Sophie Dahl and Jamie Cullum, Dermot O'Leary, Thandie Newton and Daniel Craig.

Torriano Avenue in Kentish Town, north London, has an enduring popularity with celebrities. Bill Nighy lived there until recently. Pete Doherty was a regular in the Torriano Bar on the street and newsreader Jon Snow has a house in the area.