Could Manchester rival Edinburgh as the summer's cultural destination?

It was an unassuming semi somewhere on what the estate agent's blurb described as the "Old Trafford/Chorlton border". A group of around 20 buyers had been taken there by a firm named Pennington Lee, which was new to the Manchester property scene. But when the door of the home was opened, the vendor bore the familiar, lugubrious expression of the 18-stone stand-up comic Johnny Vegas. It was, for three weeks only, the smallest theatre in the country, certainly so far as the size of the audience was concerned.

Vegas can, of course, fill theatres and stadiums with considerably greater capacity. So it is a measure of the bravado of the new Manchester International Festival, which concluded last weekend, that it allowed him the indulgence of such an innovative bad-for-box-office venue. Pennington is Vegas's real name. The Lee in question is Stewart of that name, the writer of Jerry Springer – the Opera. The conceit behind the piece was that the audience were prospective buyers and that the drama would unfold as the vendor, one Jeffrey Parkin, played by Vegas, conducted a tour of the half-refurbished property.

It was a touching piece of theatre in two halves. In the hallway, kitchen and living room, it was full of Vegas-style rants about people who don't appreciate the finer subtleties of expensive interior design: Ikea were excoriated as "flatpack paedophiles, preying on the weak and vulnerable". But he shifted to a more tragic gear in the bedrooms, where Parkin was revealed as a man who had made the mistake of thinking that the objects in a home are more important than the people who live in it.

As a theatrical concept it was a touch ham-fisted, but Vegas carried it off with such bravura – so larger than life, yet so intimate with his little audience – that at the end it was all I could do not to reach out and lay a hand on his shoulder out of human fellow-feeling.

The director of the new festival, Alex Poots, was determined from the outset that his new venture would be nothing if it was not different. The world is, after all, chock-a-block with festivals. "I didn't see the point of being a second-rate Edinburgh or Glastonbury," he says.

He laid out four prerequisites for success. "First, you can't just plonk a festival on a city like icing on a cake – it has to grow from the traditions of the place. Manchester was the world's first industrial city, so it needed to be about innovation. That meant a festival of new works. Second, the city and local businesses would have to put quite a lot of money into it. Third, the festival had to be a limited company, completely independent of the Labour council, so that there would be no question of anyone saying, 'Sorry, you can't do anything critical of the war in Iraq.'"

He has been as good as his word. One of his first commissions was One Queen and Country, in which the artist Steve McQueen created stamps commemorating 98 of the British soldiers killed in Iraq, each bearing a photo of the dead man, chosen by his family, and the standard philatelic profile of the sovereign in whose name they went to fight.

His fourth condition was that the festival director should have complete artistic freedom.

Thus was born the idea of the "world's first international festival entirely of original new work" – an undiluted diet of the kind of commissions that any other festival director will confess is the hardest part of the job. Only the most churlish of his competitors would adjudge that Poots has not pulled it off, and with some style.

The last three weeks have seen 50 events, including 25 world premieres and the rest UK premieres or firsts in some way. The most high-profile was Monkey – Journey to the West, a collaboration between Damon Albarn and Jamie Hewlett, the producers of Gorillaz, with the Chinese opera director Chen Shi-Zheng. Monkey was a richly woven tapestry of ambient anthems by Albarn and projected graphic animations by Hewlett; in and out of these merged an extraordinary circus of acrobats, contortionists and martial-arts performers telling the epic tale of a legendary Chinese prankster monkey on an event-filled journey to enlightenment.

But there have been a host of other star performers, too, from Lou Reed, giving the first live UK performance of Berlin, to performances by the world's greatest male ballet dancer, Carlos Acosta. PJ Harvey did her only UK show on her current tour, performing, for the first time, some of her songs solo. And the wild-haired pianist Mikhail Rudy and RSC actor Peter Guinness, in a bare-brick attic filled with fog and illuminated by spotlights, offered an intense, chill and affecting duologue that told the story of how Wladyslaw Szpilman survived alone, hidden in the Warsaw Ghetto, during the Nazi occupation.

By way of a regional emphasis within the programme, a reunited Happy Mondays gave the premiere of their new album, and The Fall celebrated the publication of an anthology of short stories inspired by their song-titles with a rare set.

"A festival of original new work is an inherently risky idea," says Poots. "I had to warn sponsors that we have to be comfortable if we have some failures. But most shows reached 80 per cent of capacity [in terms of ticket sales]."

There have been disappointments. The rain, which poured down in Manchester as elsewhere across the country, put a dampener on sales of the three ice-cream flavours commissioned from the celebrated gastronomic innovator, Heston Blumenthal. Take-up for the mushy pea sorbet with candied bacon and mint syrup – don't ask – was poor. Having said that, the festival's other big culinary event, Manchester Dines – which brought together chefs from the city's 10 ethnic communities – was oversubscribed many times over.

Poots tried to ensure there was a regional, community dimension to this international festival. Food made people feel involved, though he concedes that there was insufficient publicity to draw the denizens of Bury, Bolton, Oldham, Didsbury and Altrincham to the festival.

Even so, the festival dissolved many of the boundaries between high and low art. "The audiences in Monkey behaved as if they were in a gig. Many of them were clearly in a theatre for the first time. And though Il Tempo di Postino drew audiences from New York, Tokyo and Los Angeles, the place was also full of young Mancunians, as you could hear from their accents."

Il Tempo was a show by 14 global conceptual artists. The idea was that, instead of the works being defined by the space of an art gallery, they would be subjected to the discipline of time, being played out – each artist getting 15 minutes – in the Manchester Opera House. "It was the highest risk show of the festival," concedes Poots. "It was a potential car crash. Sir Brian McMaster [the former director of the Edinburgh festival, now on the Manchester festival board] said, 'If it works it will define this festival in the arts world.'"

In the event, the critics were divided on a show that ended with a naked female contortionist on stage projecting her vagina towards a live bull.

There was a delightful new work for children by Colin Matthews called Alphabicycle Order, but it was staged by the Hallé at 7pm on a school night, so was only half-full. And Monkey had been put into a theatre where around 400 of the 2,000-strong audience could not see the highest-flying acrobatics of the Chinese performers. "My stomach churned when I realised how bad the sightlines were in parts of the theatre," Poots says. "If I'd known earlier, we just wouldn't have sold those tickets."

One of the things he would like the city council to do before the next festival, in 2009, is explore the possibility of a public private partnership with the owners of either the Palace Theatre or the Opera House to provide Manchester with a theatre that can house shows like Monkey effectively.

By 2009? On this year's record, Manchester has developed a festival that could take an effective place in the annual international arts calendar. Poots seems both flattered and horrified by the idea. "Finding artists at the top of their game who are able to produce new work, on this kind of scale, would be hard to do every year," he says. "Anyway, next year is Liverpool's big year." He'll be happy to be back in 2009.

It will be an event worth waiting for. It was smart to recognise that the first Manchester Festival had to mark out its territory as something different and distinct from the rest of the festival round – Hay, Glastonbury, the Proms, Edinburgh, Womad and all the rest. It still needs to cultivate a greater presence in the city, spilling out onto the streets more, as the Fringe at Edinburgh does.

And it needs greater involvement of local communities – geographical, ethnic and religious – though that ought to be an easy task compared with attracting the quality and rage of talent that has been on show in this debut year. In years to come the template of a festival of premieres could become something of a straitjacket – there has been the odd flicker of that even in this first year. But it will ensure that the festival retains the cutting edge and ingenuity that Mancunians have long bragged is the hallmark of the city.