Linger on in Lisbon

Grand history, low prices and a modern vibe make the Portuguese capital well worth a visit.

A Brasileira, in the district of Chiado, is one of Lisbon's best-known cafes. Alamy
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The taxi fare from the airport into Lisbon city centre is just €12 (Dh61). The driver thanks me so fervently when I tip him €3 (Dh15) that I walk into the Altis Avenida hotel feeling half pleased and half uneasy. His worn expression and shabby clothes stay in my mind as I take the lift to my room. I have a quick look around - high ceilings, black carpet, shiny bathroom: all very modern for this old-fashioned, once grand city. Then, with a free shopping guide from reception and a Lisbon Card for the trams (bought at the airport for €28.50 [Dh144] for 48 hours), I set out to make the most of two nights in a city I haven't been to for five years.

In Rossio Square, near my hotel, tiled in Lisbon's distinctive black and white mosaics and lined with 19th-century shops and cafes, I'm struck by the number of shoeshine men. Shoeshine men spell poverty. Maybe I just didn't notice them on my last trip? Suddenly all the stories about Portugal's deepening economic woes and a possible EU bail-out make sense. So does a recent UK survey comparing the cost of 36 countries based on a basket of eight items a visitor might buy. Portugal came out cheapest this year.

But don't feel sad and anxious for the Portuguese, I tell myself bracingly, as I slide onto a chair at the wood-panelled old Café Nacional. Be glad. Low prices means plenty of tourists. Make the most of it. And €1.6 (Dh8) for a coffee and cake at the Nacional is another bargain. Especially when the cake in question is the most delicious, sweet yolky pasteis de nata. You find these cinnamon-topped little cakes all over Lisbon - invented in a 19th-century nunnery as a way to use up yolks after the egg whites had been used to starch the nuns' wimples.

And in the Chiado shopping streets, up the hill from Rossio, I am soon relishing being able to shop without pain. In the minute Luvaria Ulisses glove shop on Rua do Carmo - so small that only one customer can get in at a time - I discover virtual doubles of the long, handmade calfskin gloves that Louis Vuitton, Prada and Gucci had this winter at about €700 (Dh3,542) - for €150 (Dh759). Wrist-length gloves cost €40 (Dh202). "My Italian customers say my gloves are better than those in Florence because we cut the fingers so long and slim," says the owner encouragingly, squeezed into the space between the tiny counter and the stock cupboard.

Further up the hill and around the corner in Paris em Lisboa on Rua Garrett, a linen store opened in 1888, I want to restock my entire linen cupboard. White, fringed monogrammed hand towels are an absolute snip at €9 (Dh46) each.

Dusk is falling and I'm now laden. I have a decaf and another sweet, eggy mouthful of pasteis de nata in the city's most famous old cafe, A Brasileira. All brass rails and dark mahogany brought back from Portugal's colony of Brazil, it harks back to the country's glory days as a great maritime power. I look in the elaborate church across the street and debate whether to take the Metro out to the 1998 Expo site on the edge of the city, an architectural treat, apparently. And then on Praca dos Camoes, the square that Rua Garrett leads into, I spot the thing that lifts the heart of every visitor to this lovely but steep-streeted city (strung beside the River Tagus along seven hills): the number 28 tram. This 19th-century wooden contraption clanks its way almost everywhere you might want to go. (The 25, with a route along the waterfront, goes everywhere else.)

I could sit on the dear 28 for hours, I think, as we rattle along. Lights are lit across the city now, so I have a clear view into little shops that tell you Lisbon's inhabitants still wear hats, smoke, make their own clothes and like to embroider things. When we start to climb past the Se cathedral into the alley-like streets of Alfama, the ridiculously photogenic medieval area of the city, people have to press themselves into doorways as the tram passes. Staring out, completely absorbed, I stay on to the square at Graca at the end of the route. Then I get on again for the return trip, getting off at a restaurant I'd spotted earlier.

It's 7pm and the 19th-century Estrela da Se on Largo San Antonio is empty, but so gloomily alluring I don't care that I am going to be the only person eating. I love its faded yellow walls, ticking clock and the tables set inside a series of wood-walled booths. I don't understand a thing on the menu - it's all in Portuguese. "Er, chicken?" I hazard. "Chicken and chips," the waiter says morosely. Fifteen minutes later, escalopes and the sneered-at chips arrive, oily but delicious. Safer not to order a coffee, though, I think. I fear the gloomy waiter would only pretend it was decaf.

Alfama is famous for its almost hilariously gloomy old fado bars, where locals gather to listen to wild, mournful lamentations that like the city itself seem to hark back to jollier times. But they don't get going until late. So I wait in dark chilliness for another 28 tram, and take it all the way to the other end of the route, just beyond Rossio. By 9pm, I am in bed back at the Altis Avenida watching a Portuguese soap opera set in Lisbon, thinking how satisfying it is to travel on your own, sometimes.

Friday morning is sunny and warm. The hotel's seventh floor roof terrace restaurant turns out to have good views and the pasties de nata I am now virtually living on. Across the street, I have a quick look inside the old Avenida Palace hotel (no relation) where, in the Second World War, throughout which Portugal remained neutral, the wood-panelled bar with velvet covered chairs was a spies' rendezvous. Then I take the funicular up the hill into the Bairro Alto and Principe Real. I find the areas transformed. Little design shops now line the elegant streets and an old bakery, Orpheu, now a cafe, has become the cool neighbourhood hang-out.

I walk down narrow streets of little lounge bars and boutiques, have a wander down Rus de Sao Bento, which is lined with antique shops, and by early afternoon end up in Santos. This is Lisbon's new waterfront design district, conjured in the last three years - with the help of EU grants - out of an old industrial area. It feels fresh, young and lively, full of new restaurants - Forneria and Estado Liquido sushi lounge on Largo de Santos look promising - and 20-somethings with asymmetric haircuts. "Nightlife here is wild, I tell you," an American student tells me, but I will have to take his word for it.

Tomorrow, before I leave, I muse, I have got to dip into the museums I remember so fondly. Immaculate interiors, treasure-packed collections: the Gilbenkian, the Museo Nacional de Arte Antiga, Museu da Marioneta and Museo do Design in Belem have to be some of the most engrossing I've ever been to. I should try to get out to the 1998 Expo site.

"That year was Lisbon's turning point. That was the year and that was the event Lisbon started looking forward, not backward," a man at the tourist office tells me, trying to sound positive. There's also the new Mude fashion and design museum to see.

But for the time being I am going to wander back into the centre - it's a treat to be able to get everywhere within a 10-minute walk or a few stops on a tram. I'm going to buy a takeaway coffee and, er, possibly something else, and then I'm going to take the train out to Cascais, the resort on the very edge of Europe, just 30 minutes away, where Portuguese explorers bid farewell to home before setting out for Africa and the Americas in their great voyages of the 16th and 17th centuries. I'm just going to sit and stare out of the window at the lovely, great wind-slapped beaches, feeling anonymous and free and happy.

If you go

The flight

A return flight from Dubai to Madrid on Emirates (www.emirates.com) costs from Dh4,055, including taxes. A connecting flight from Madrid to Lisbon on TAP Portugal (www.flytap.com) costs from €66.11 (Dh335), including taxes
The stay The newest five-star hotel in Lisbon is the 70-room Altis Avenida (www.altishotels.com; 00 351 21 044 0000). A double room costs from €125 (Dh632), including taxes and breakfast

The info

For more details, go to visitlisboa.com