It is 2am on a balmy Saturday night and things are just heating up in the Theatre Bar. Clubbers of all ages are sipping on cocktails in the open-air foyer - some of them dancing in the light Atlantic breeze, others munching on swordfish steaks and watching the promenade. Red lights from the vodka bar light up the square white walls like flames. It feels like being trapped inside a giant, friendly ice cube.
If what you expect from Madeira is elderly snoozers and sticky wine, you are tragically out of date. Don't tell Auntie Mabel, but the local tipple now is Poncha: a fiery cocktail made from sugar cane rum, lemon juice and honey. The clubs are more Posh 'n' Becks than Darby & Joan: the trendy crowd from the hidden jazz bar in a Funchal attic mingling with the teenagers outside Do Fa Sol and heading to the nearby village of Camera dos Lobos to party till dawn.
Of course, the old Madeira is still there, taking tea at Reid's Palace Hotel and a coach to the top of the "Monte" so they can walk slowly back down the leafy old levadas, or water courses, before supper. It's just that Madeirans are catching on to a new market, and it is more keen on waterskiing than levada walks. The majority of young locals now go to university in mainland Portugal, and they are returning with new ideas about the island they grew up on. One young prodigal Madeiran, the architect Paulo David, is responsible for the stunning new modern art gallery up at Vila de Calheta, on a clifftop overlooking Madeira's one imported sand beach. From a distance the gallery is a muddle of cubes built from porous, volcanic bricks. Up close, it is a breathtaking visual symphony of light and shadows, precipitous angles and sudden sea views.
This is a productive time for young Madeiran architects, thanks to a new breed of upmarket hotel, known as a Quinta. Quintas were the luxury homes of rich European merchants who used the island as a trading post, and many have been in the same family since the 18th century. It was 100 years later that the first British tourists came for the temperate climate and healing sea breezes, and still they come. Now though, they make the Quintas their homes, to soak up the climate beside the pool and enjoy far too much of the exceptionally good local food. Go to the local market early in the morning and they are still trading in tomarillos - a bitter baby cousin of the tomato - dipped in sugar, and scooping out a taste of the comical "pineapple-banana" with a spoon. You'll also see the local tuna and espada - a monumentally ugly swordfish - being thrown around by machete-wielding desperadoes. If you would rather avoid the market place a mouth-watering degustation menu is available at Casa Branca, a Quinta exquisitely modernised by the award-winning local architect Juan Favil. The original 18th-century building has been extended with pale wood and modern glass: the glass-walled bar is such a seamless part of the gardens that it feels like drinking al fresco.
Quintas are all magnificent, unique and individually owned, some by the descendants of the original owners. The Quinta Serra Golf is a powder-blue, neatly shuttered 1920s building now run by the former little girl who grew up there and her husband, both doctors. They still cook "Grandmother's Onion Velvety Soup" and a sensational chocolate pudding whose secret recipe was disclosed by a mysterious "Teresa". And if you ask them nicely, they will take you to the crumbling general stores, run by Virgine, who is approximately 180. In its cool, other-worldly interior, surrounded by adverts for Bovril and a post-office box, Virgine sells cider from a vast barrel, so dry that it makes your teeth wince.
They are good at gardens in Madeira, and many Quintas are justifiably proud of theirs. At Quinta Jardim de Serra they burn eucalyptus to heat the water, and watch the guests standing on their balconies in the mornings, sniffing the air. From Quinta do Monte, accessible by cable car, you can take a rickety, man-powered toboggan back to the foot of the mountain. It is a little more heart-in-mouth than the traditional levada walk. But at least there is no danger of snoozing.
British Airways flies three times a week from Gatwick to Funchal from £115 return (0870 850 9 850; ba.com). For more information about the Quintas contact Quintas da Madeira (00 351 291 203 420; quintas-madeira. com)
1. Quinta do Furão
This beautiful windswept, clifftop retreat has magnificent views and a healthy levada walks. It is currently planting a new vineyard. During September's "vindimas" celebrations, guests can help stamp the grapes for the harvest. Most will also want to help drink the wine, on balconies overlooking the vineyard.
2. Quinta Serra Golf
Owned and run by two exceptionally kind and friendly doctors, this used to be the clubhouse for the Santo da Serra golf course, home of the Madeira Island Open, and is still the Quinta of choice for golfers and walkers. The recipes are worth trying, particularly grandmother's onion velvety soup and the chocolate pudding.
3. Quinta do Monte
Guests at this mountain-top hotel get a five-euro reduction on the price of the cable car to the top, and their own minibus laid on. Just as well since the traditional way down after a lunch that includes mandarin, avocado and Pernod sorbet and mini banana pie is by scary, man-powered toboggan.
4. Quinta Jardins do Lago
This relaxed and elegant Quinta was once the home of the British General Beresford, who left his 19th-century sideboard in the dining room because it was too big to take home by ship. It is now the home of 460 species of plants, including its own banana and mango orchard, and Columbo, the giant tortoise.
5. Quinta das Vistas
Treatments at this elevated Quinta's spa involve being covered in aloe vera, coffee grounds, wine or chocolate. Sun-worshippers will love the view from the terrace. Sybarites will love the champagne on the breakfast table and the cute bottle of Blandy's Madeira wine and cake in each room.
6. Quintinha de São João
The five-star hotel close to the centre of Funchal has acres of ancient gardens, a second-floor swimming pool and deck with views right over the mountains and 43 rooms, each with a balcony overlooking the gardens. The interior of the hotel is decorated with traditional Madeiran embroidery and craftsmanship.
7. Quinta Bela de São Tiago
Right in the centre of Funchal, this tastefully extended Quinta has stunning sea views, its own sub-tropical gardens and a restaurant in the old ballroom. Guests are welcome to stroll through the grounds in the mornings to search the orchard and banana plantation for an alternative breakfast.
8. Quinta da Casa Branca
Exquisitely designed by award-winning local architect Juan Favil, the new part of this 18th-century Quinta consists of a cool, glass-walled bar and a weirdly telescopic wooden hallway. Best of all is the stroll to a breakfast of fresh, ripe fruit through gardens crammed with tropical flowers.
9. Quinta da Bela Vista
Good enough for Queen Sylvia of Sweden, who stayed in Suite 411 surrounded by the stunning antiques amassed by the owners. As well as this world-renowned collection, the Quinta boasts botanical gardens and the best views of Funchal harbour and its firework display every New Year.
10. Quinta Jardim de Serra
The biggest Quinta, former home to the controversial first British consul, Henry Veitch, is screamingly pink. It stands within 140 hectares of eucalyptus and cherry trees. Look out for the great slate-tiled pool and fitness rooms and the local firewater, which is similar to grappa but is described by the manager as "Viagra".