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The museum MUDE shows off design classics in the half-gutted shell of a old bank.

In Principe Real Park, sweet cinnamon-scented bouillon is served at a 1950s kiosk. As bargain-hunters peruse the antiques on a nearby street, a brass band strikes up, startling an old man under an ancient umbrella cedar. Here in Principe Real, life is full of surprises; lately the raggedy, once-aristocratic neighbourhood has been getting an injection of youth and culture.

Nestled between Lisbon's Parliament building and botanical gardens, the area boasts a long tradition of selling antique furniture.

But now its hallmark is trendy clothing and jewellery. Here, you can avoid hordes of tourists and chat to the nouveaux riches or bourgeois-bohemian foreigners who have been flocking to live here. There are genuinely rare and expensive antiques on show, but if all you can afford is window shopping, then it's worth a stroll along Rua Dom Pedro V to browse boutiques selling vintage party gear and galleries offering the work of local artists.

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To market Every Saturday morning, Principe Real, perched on one of Lisbon's seven hills, bustles when its central square is taken over by the city's only all-organic produce market. On one side, neat rows of canvas stands hold bulging crates of soil-encrusted fruit and veg. Not in the mood for food? Across the park, vendors sell quality antiques and vintage clothing at good prices.

In the MUDE Not far away, a five-storey former bank building - its interior half-demolished by a previous owner - was converted by architects Ricardo Carvalho and Joana Vilhena into MUDE, Lisbon's hottest and brashest museum. Exposed brick walls, granite columns and concrete ceilings provide the perfect setting for 170 rare furniture pieces, such as a strikingly quirky dresser by Ettore Sottsass, plus hundreds of haute couture objects from the likes of Givenchy. Museum of Design and Fashion of Lisbon (MUDE), Rua Augusta 24; 351 (21) 888 6117; www.mude.pt

In the pipeline Honour the city's strong architectural tradition by dining at Chafariz da Mae de Agua, a fun enoteca (wine shop and restaurant) housed in the bowels of Lisbon's ancient aqueduct. You can walk through the vaulted archways of underground waterways after sampling the wines and quirky dishes such as dates with bacon au gratin or mouth-watering goat cheese on toast. Rua da Mae d'Agua; 351 (21) 342 2079; www.chafarizdovinho.com

Creamy cocktails Just a stone's throw from Principe Real Park you will find Cinco, a glass-walled lounge that feels a bit like a goldfish bowl. Usually busy behind the bar is the owner, affable Brit Dave Palethorpe who has been shaking cocktails for some of Europe's finest drinking establishments. Thursday nights, try the special Black Pepper and Basil - made with crushed basil leaves, freshly squeezed lemon juice and a touch of black pepper lengthened with Tanqueray gin, sugar syrup, a splash of soda and orange zest. Rua Ruben A Leitao 17-A; 351 (21) 342 4033; www.cincolounge.com

Shop till you drop With ornate wooden doors, richly upholstered antique furniture and glass walls, the decor of this Parisian-inspired antique shop is straight out of the Marais. A crew of stylish Brazilians runs the restaurant and antique shop, which is stuffed with crystal chandeliers. An all-day menu features dozens of herbal teas and many varieties of salmon and beef carpaccio. Rua Dom Pedro V 74; 351 (21) 246 7629; www.fabricoinfinito.com

All dressed up A few doors down, retro women's party dresses and shoes are beautifully displayed at Cool de Sac, run by gorgeous Spanish owner Maria Luisa Pries. This treasure trove clothing shop stocks brands such as Chloé, Repetto, Ba-Sh and Paul and Joe Sister. Rua Dom Pedro V 56; 351 (21)211 919 438; www.cooldesac.pt

Raising the bar Do not visit Principe Real without at least poking your head inside the astoundingly ornate Pavilhão Chinês, a cozy bar that feels like the set of a 1940s movie. Walls are stacked with seemingly endless collections of figurines, military paraphernalia, antique toys and art making the place more of a museum than a bar. An antique billiard table contributes to the refined-but-not-stuffy atmosphere. Rua Dom Pedro V 89; 351 (21) 342 4729.

Special to The Globe and Mail

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Where to stay Hotel Bairro Alto 2 Praça Luís de Camões; 351 (21) 340 8288; www.bairroaltohotel.com. From $265. Possibly Lisbon's coolest hotel, this five-star retreat has 1940's-style rooms decorated with stencilled murals of birds. Hotel Principe Real Rua da Alegria 53; 351 (21) 340 73 50; www.hotelprincipereal.com. From $185. Ideally situated for boutique shopping and the boisterous bars of Bairro Alto; it is very close to a cluster of small restaurants around the park. Room 502 has a spacious suite with amazing rooftop views over Lisbon. The breakfast menu includes hot pastries and champagne. R.E.

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