Why go now
This is the winter to go north. The Icelandic capital is blossoming, with the new Culture House (1) reflecting the nation's art and literature, Iceland's biggest and tallest hotel recently opened, and a host of fresh places to eat and drink. And just as the Northern Lights season begins, two new flights are starting to the Icelandic capital.
British Airways (0344 493 0787; ba.com) returns to the Heathrow-Reykjavik route next week, while early next month easyJet (0843 104 5000; easyjet.com) launches flights to the city from Stansted, adding to existing services from Bristol, Edinburgh, Gatwick, Luton and Manchester. The national airline, Icelandair (0844 811 1190; icelandair.co.uk), flies from Birmingham, Gatwick, Glasgow, Heathrow and Manchester, while its rival Wow Air (00 354 590 3000; wowair.is) flies from Gatwick.
While Reykjavik has a domestic airport within walking distance of the centre, the international airport is 30 miles south west at Keflavik. Treat the 45-minute journey into the city as a bonus, because the highway from the airport runs through dramatic volcanic terrain.
The Flybus (00 354 580 5400; re.is/flybus) runs an erratic schedule to the BSI bus terminal (2) for a return fare of 3,500 Icelandic krona (ISK3,500/£17), with transfers at extra cost to most city hotels and hostels.
Get your bearings
Reykjavik is draped across a peninsula shaped like a dragon's head, tucked into a sheltered bay in south-west Iceland, with dramatic views of the mountains across the water to the north. The historic core of the capital (known as 101, after the local postcode) lies between the harbour and an inland lake, Tjornin. The city's helpful tourist office (3) is at Adalstraeti 2 (00 354 590 1550; visitreykjavik.is). It opens at 9am daily; to 6pm Monday to Friday, to 4pm Saturdays and 2pm on Sundays.
A Reykjavik City Card offers unlimited public transport, entry to most museums and thermal baths, and a range of other discounts for ISK4,400 (£22) for 48 hours; citycard.is.
Iceland's largest hotel is the brand- new 320-room Fosshotel (4), east of the city centre at Porunnartun 1 (00 354 531 9000; fosshotel.is). A standard room with breakfast is priced at €185; the quality of the panorama increases, along with room rates, as you rise to the 16th floor (if you're staying lower down, nip up in the lift to enjoy the views).
The Marina Hotel (5) at Myrargata 2 (00 354 560 8000; icehotels.is) is a 21st-century place to stay, housed in a 20th-century paint factory next to the harbour's dry dock. The public areas on the ground floor are whimsical, while the comfortable rooms come equipped with instructions for tying knots or learning Icelandic phrases. A new block offers all-suite accommodation and the services of a butler. Last-minute prices are typically ISK51,000 (£255) double, including what is billed as the “best breakfast buffet in Reykjavik”.
At the other end of the price spectrum, choose a hostel – which in Reykjavik are more like budget hotels. The City Hostel (6) is east of the centre, on the north side of Laugardalur Park, adjacent to Iceland's largest thermal pool complex, Laugardalslaug (7). A bed in a four-person dorm costs ISK3,400 (£17), while a private double is ISK11,700 (£58). Rates include en-suite facilities and breakfast.
Take a view
The harbourside has been transformed by Harpa (8), a vast concert hall conceived during Iceland's boom years. When it opened in 2011, the country was already plumbing economic depths. On any day from 8am to midnight you can see the way the grid of 1,000 blocks of glass teases the light (00 354 528 5000; harpa.is).
Take a hike
Follow the waterside west; the earthworks on your left are the original harbour walls. Tourism is gradually displacing industry, as the converted Marina Hotel (5) shows. Where the harbour wall turns north, the Maritime Museum (9) tells the story of life on Europe's raw edge (00 354 411 6300; reykjavikcitymuseum.is; 10am to 5pm daily; ISK1,400/£7). Beyond it at Fiskisloo 23, Whales of Iceland (10) contains life-size replicas in steel and foam of 23 cetaceans found around Iceland's coast (00 354 571 0077; whalesoficeland.is; 9am to 6pm daily; ISK2,900/£14.50). Head up to the roundabout to find the Saga Museum (11); there are impressive murals on nearby buildings. Walk between the colourful corrugated-iron dwellings on Vesturgata, and emerge beside the tourist office (3).
Lunch on the run
Here you'll find Pylsuhusid, a kiosk serving hot dogs (Iceland's favourite fast food) for ISK450 (£2.25). Or, on a bright day, the adjoining terrace at Uno is a lunchtime suntrap, for enjoying a salmon bruschetta (ISK1,350/£6.75).
Despite being capital of a country of only 300,000 people, Reykjavik has a remarkable breadth and depth of culture. In the heart of the city, the Hafnarhus (12) is a converted warehouse at Tryggvagata 17 that houses the Reykjavik Art Museum (00 354 590 1200; artmuseum.is; 10am to 5pm daily, Thursdays to 8pm; ISK1,400/£7). It houses a diverse and startling range of modern works and an explanation of how American artist Richard Serra created his Standing Stones exhibit on Videy Island.
The handsome 1909 National Library and National Archives of Iceland is now at the Culture House (1) where it traces the island's soul through poignant words and images (00 354 530 2210; culturehouse.is; 10am to 5pm daily except Mondays; ISK1,200/£6). The National Museum (13) at Suourgata 41 (00 354 530 2200; nationalmuseum.is; 11am to 5pm daily except Mondays; ISK1,500/£7.50), covers the people's story since humans first came to Iceland.
The handsome, theatrical Beer Garden at the Fosshotel (4) has two dozen beers in strengths ranging from 4.5 to 10 per cent. (As winter deepens, you may be relieved to learn it is an indoor garden.)
Dine with the locals
On a cold northern evening, Babalu (14) at Skolavordustigur 354 555 8845; babalu.is) is a cosy café for wolfing down traditional lamb soup (ISK1,680/£8.40) and cheesecake. For a hint of Latin American sunshine, there's Tacobarinn (15) at Hverfisgata 20 (00 354 519 7579), where dishes such as salmon ceviche (ISK2,350/£11.75) bridge the gap between north Europe and South America.
Sunday morning: go to church
A spaceship built from concrete organ pipes sums up the commanding Hallgrímskirkja church (16) (00 354 510 1000; hallgrimskirkja.is; 9am to 5pm daily, entry free). Taking the lift heavenwards to the top of the 73m bell tower costs ISK900 (£4.50).
Laugavegur is the nation's main shopping street. For vintage fashion, track down Nostalgia (17) at No 32 (00 354 511 2023) or, opposite at No 28B, Spúútnik (00 354 533 2023). Vinyl music shops are also in vogue, with Bad Taste Records at No 35 featuring a museum dedicated to local band The Sugarcubes. For substantial purchases you can reclaim the VAT.
Out to brunch
The Laundromat Café (18) at Austurstraeti 9 (00 354 587 7555; thelaundromatcafe.com; 9am to midnight on Sundays, longer hours other days) allows you to do your washing as you feast on grilled rye bread with avocado and two fried eggs for ISK1,890 (£9).
A dip in the park
Iceland has harnessed geothermal energy to provide its citizens with limitless hot water. This geological bounty is best enjoyed at Laugardalslaug (7), the complex of pools on the edge of Laugardalur Park. It opens 8am to 10pm at weekends, 6.30am to 10pm on weekdays, admission ISK650 (£3.25).
Take a ride
The ferry to Videy Island takes five minutes (ISK1,100/£5.50 return) from the pier at Skarfabakki (19) at 1.15pm and 2.15pm, taking you to a windswept isle that's also an outdoor art gallery. At the western end is the Peace Tower – a white cylinder – created by Yoko Ono. It carries the message “Imagine Peace” in 24 languages.
Icing on the cake
On your way back to Keflavik airport, divert by way of the Blue Lagoon (00 354 420 8800; bluelagoon.com), where the run-off from a thermal power station has become Iceland's biggest tourist attraction.
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