Estonia: Footprints by the shores of the Baltic's Magic Kingdom

I have gate-crashed the Magic Kingdom. There is fresh snow on the ground. Every tower and parapet of Tallinn's medieval Old Town is fringed with fairy dust. The baroque spire of the Lutheran Toomkirik points like a three-stage rocket at the ice-blue sky. A Whomping Willow is throwing scary shapes on the ivory flanks of the church. Around the next corner the onion domes of the orthodox Nevsky Cathedral are supported on pillars of ice cream.

The hues are saturated, pure, sharp, clean – proto colours. There is a hallucinogenic edge to it all. Any minute now a white rabbit might come hopping down the cobbled streets, an elephant with flapping ears might glide between the dreamy spires. I wonder about the latitude and the intensity of the light. Up here on the shores of the Baltic, I reason, we might be closer to the sun. But then what's reason got to do with anything?

If logic had any rules, this small former Soviet republic in the furthest corner of north-eastern Europe should be drowning in the whirlpool of the eurozone. But it's not like that. Despite a brief blip when the property bubble burst and the economy went into reverse around 2008, this Baltic Tiger is back, not quite roaring, but purring nicely. The good times are rolling on. The anticipated growth figure this year is just under 2 per cent – not thrilling by the Estonian standards of the early 21st century – but George Osborne would be over the moon if he could make a similar projection.

In the commercial heart of Tallinn the Soviet-era Kaubamaja, with its natty new "K" logo is unrecognisable from the department store that marked its dreary communist inception – its acres of high-end retail are now as glitzy a temple to consumerism as you could hope to see on Fifth Avenue. Viru Keskus, the mall next door, is equally awash with talismanic international brands – Chanel, Armani, Swarovski, Calvin Klein – powerful enough to erase all memory of the grim old days.

Following independence in 1992, the headlong rush for all things Western was perhaps inevitable. Hotelier and restaurateur Martin Breuer recalls how it used to be. "People wanted to eat exotic – they wanted to eat strange – after so many years of Soviet rule. The stranger it was, the better it was." But over the past 20 years tastes have matured into something less flashy and more indigenous. Style and quality come with an Estonian imprimatur these days.

Restaurants are finally recognising the joys of sourcing locally. The recently opened F-Hoone (F-Block) in the Kalamaja suburb keeps it simple. The restaurant is popular with the bohemian set – it is housed in a former electro-mechanical factory reputed to have turned out components that went into space in the Sputniks. The interior is an effortless mash-up of industrial chic, exposed steel joists, naked brickwork, and vibrant colour. The atmosphere is warm and open. The food is unfussy; my salmon is fresh, lightly poached and excellent value.

Fashion boutiques such as Nu Nordik, at VabaduseValjak 8, and Naiiv, at Pikk 33, also suggest a new aesthetic: cosy, quirky, fun, warm, and outrageously vivid. Designer Liina Viira uses Estonian folk motifs for inspiration. Her shop, Naiiv, displays a range of knitted hats, scarves, bags and dresses. The eruption of carnival colours challenges any preconception you may have that Scandi/Nordic design is muted and minds its manners.

In a similar vein, Etno.ee at Tartu Road 6 is a sign of the times – the store takes evident pride in the country's ethnic design traditions. Folk patterns from various parts of Estonia are given a new twist and deployed to invigorate a range of household goods – cushions, kitchen stuff, lampshades. A bright yellow pair of wellies printed with folksy floral designs from the island of Muhu catch my eye partly because of their sheer exuberance and partly because I am headed for the island.

Muhu is a two-and-half-hour drive west from the capital. The ferry from Virtsu to the island feels like an ice breaker – navigating a narrow channel through the frozen sea. Mini floes grind against the hull of the boat, giving the short crossing the feel of an Arctic expedition.

Padaste Manor dates back to 1566, though the current structure is largely 19th-century. Framed by ash trees, the house stands out against the surrounding snow in its warming cream and terracotta livery. It was rebuilt from a ruin in 2008 by current owners Martin Breuer and Imre Sooaar, part of a long-term love affair with a property that they took on in 1996.

Now it is a luxury hotel, finished tastefully in the modern idiom under the marketing tag of Simple Luxury. Gold taps and chintzy drapery are conspicuous by their absence. Stripped wooden floors, kilims and animal-skin rugs, occasional antiques and log fires set the tone for cool and cosy comfort. It's tempting to stay indoors for the duration.

Martin's pitch for his hotel is disarming: "Nothing much happens here," he says. "A farmer moves a cow from left to right in the morning and from right to left in the evening, and then his day is done. There are no spectacular things – no big mountains, no waterfalls, no things which have an 'awe' effect."

I get his drift but he is being unfair. The manor is located on the shoreline of the Gulf of Riga. The view stretches out from the front of the property through the grounds onto the frozen sea and onwards to some small islands. Martin is right – there are no mountains or waterfalls or wildebeest sweeping majestically across the plain. But there is plenty to awe the visitor in many subtle and magical ways.

Today the sun and clouds are playing tag. The light changes by the moment – the landscape is benign one minute, sullen and menacing the next. The view is perpetually on the cusp, always rearranging itself into the next tableau.

There are of course things to do, and this afternoon a horse ride in the ice and snow has been arranged. A lovely idea, in theory, if I forget the deep mutual distrust that usually characterises the relationship between horses and me. As I arrive at the stables an elf comes bounding out to greet me. This is Martin Kivisoo, the horseman of Muhu. He has a long white beard and is wearing a white sheepish hat. For a few seconds I am not sure which way up his face is.

My mount is called Racy, a gentle horse I am assured, suitable for beginners. She is part of a tough and ancient Estonian breed that can be left out in all weathers – and here that can mean -30C for weeks at a time. Martin spends much of the ride telling me about the spirits of the forest. We dismount at a seven-way crossroads in the juniper forest. This is an auspicious spot, he explains, to honour Uku, the ancient Estonian god of the sky and the harvest. We circle a holy rock, bang it with a smaller rock and throw grains (which Martin carries in his pocket for just such eventualities) towards the west as a gift. I'm OK with all this as it means less time in the saddle.

His assistant, Kati, is keen, however, that I do some riding – and keeps breaking the horses into a trot. Try as I might I have never mastered the rhythm. The more I try the worse it gets. The bumpity-bump is not good; not good for me, not good for the unfortunate horse. We are mercifully at the end of our ride, within yards of dismounting, when Racy decides enough is enough. And tries to kill me.

She shies to the right and throws me off her back. I land on my head on the crème brûlée icy crust of the snow. I am upside down with my feet still tangled in the stirrups. This is not an attractive look – luckily no photos are taken. I am removed from the vicinity of thundering hooves. Racy appears to be smirking. No damage is done, though my dignity is sorely bruised.

The sunset back at the manor is dramatic. As the shallow sun begins to dip, a red blade of light travels like a laser up the grand avenue, illuminating the canopy of the barren trees and bathing the manor in an eery pink glow. Having locked on to its target the red beam intensifies until the house looks as if it might be catching fire. Looking westwards, the heart of light is blinding, a rose-tinted halo projects around the reeds and shrubs poking through the ice.

The Simple Luxury slogan seems slightly disingenuous when dinner is served. As befits the restaurant named the best in Estonia for the past two years, it is an elaborate feast for the senses. The seven-course tasting menu is calibrated to the seasons and leans on local traditions and ingredients, which can include, somewhat counter-intuitively, ostrich reared on a local farm.

Tonight's medley is more traditional: courses include cod with cauliflower mousse, beetroot consommé and steak with wild mushroom sauce. Chef Peeter Pihel saves the best till last with his Muhu Apurokk. It looks deceptively like cheesecake but is, in fact, his take on a local pudding made with potato and sour milk. It is served with gooey fermented birch sap and flakes of liquorice and ash meringue. The apurokk is beautiful to look at and seductive and mysterious in the mouth.

In the morning, Martin Breuer marshalls his guests for a walk on the sea. We don snow shoes. Martin takes us to the edge of the shore, which is indistinguishable from the frozen sea. It's a blazing sunny day and there are visible fissures in the surface of the ice. He reassures us by going ahead. "I weigh more than most of you, so if you follow where I tread you should be OK," he jokes.

The guests are a varied group, from Italy, Holland, Russia, Estonia and North Wales. It is an unlikely location for the tribes of Europe to be coming together. Our shadows are elongated on the glittering crystal surface. Occasionally the ice is cratered and volcanic, in other places it has thinned to a transparent lens through which we can see flowing water.

We shuffle to a small island across the bay, cooing at the wonders around us in a babel of European languages. As we return I glance back and see the line of footprints we have left on the surface of the sea. The laws of physics have been suspended. I am in Estonia. It seems the most natural thing to walk on water.

Travel essentials

Getting there

Sankha Guha travelled with Regent Holidays (0117-921 1711; regent-holidays.co.uk), which offers a twin-centre holiday with four nights at the Telegraaf Hotel in Tallinn and three nights in Padaste Manor on Muhu Island, both with breakfast. The starting price of £995 per person based on two sharing includes return flights with Estonian Air from Gatwick and transfers. Ryanair (0871 246 0000; ryanair.com) flies to Tallinn from East Midlands, Edinburgh, Luton and Manchester; easyJet (0843 104 5000; easyJet.com) from Liverpool and Stansted; and Estonian Air (estonian-air.ee) from Gatwick.

Further information

Visitestonia.com