Since freeing itself in 1989 from the domination of the Soviets—the latest in a long series of invaders over the centuries that have included the Mongols, Austrians, and Nazis—the Hungarians have been free to make the most of their talents and democratically choose their own leaders. Indeed today, the shadows of its troubled history have finally lifted.

And while Hungary is still awash in goulash—the simple soup and national dish that, like many local dishes, makes use of liberal quantities of paprika—the capital is slowly seeing restaurants from various countries open up. While there is still a plethora of local duck dishes on menus, these days you are also likely to find pizzas, sushi and fine wines.

In rapidly gentrifying, hilly Buda on the river's west bank, home to royals and nobles and Habsburg palaces, as well as in the lovely 19th-century homes of Pest, word is getting out on the attractiveness of Budapest. Foreigners, eager to find a historical setting in Europe, are snapping up property and the city's desirability is surging.

Millennia apart, communal baths were built by the Romans and the Ottomans. Many are school operating today. Try the Gellert, Kilarly or Rudas Baths to soak up this social institution. Also try to check out the Hungarian State Opera House. In March, the Budapest Spring Festival takes place and the city will celebrate with music, dance, theatre and opera.

Away from it all, in the Danube between Buda and Pest is the lovingly landscaped oasis of Margret Island, where locals and travellers alike come to briefly escape the urban environment. Making up for the relative absence of medieval buildings, Budapest is sometimes called ‘the Paris of Central Europe’ because of its grand collection of Baroque, Neoclassical and Art Nouveau.

Beyond its arts and culture heritage, Budapest's image has been boosted by the opening of designer stores such as Louis Vuitton and Salvatore Ferragamo. An increasing number of luxury hotels, with all the facilities demanded by interenational travellers, is a further testament to the escalating fortunes of the Hungarian capital.

Happily, institutions such as Nagyvasarcsarnok—the Central Market Hall in Pest—remains a popular place for shopping, and dining on hearty local fare and the sweet wine of Tokaji. Other all-but-abandoned structures are coming back to life—such a ritzy Four Seasons Hotel that was once the Secessionist-style Gresham Palace.

The archeological history of Budapest shows that the area was inhabited by Celts and Romans before the Hungarians took over. They held off a challenge by the Mongols, who thundered in from across the central Asian steppes. In their wake, rich local and foreign entrepreneurs have left cute boutiques and chic restaurants and cafés in recent years. And they are noticeably cheaper than those in those two other major central European cities in the area—Vienna and Prague.

To see just how dramatically the once a Soviet city has embraced capitalism, just visit WAMP—Budapest’s monthly design market—where all kinds of hip handicrafts, jewellery, prints are snapped up by the Bohemian visitors here. But perhaps the very coolest place in this hip, emerging city is Liszt Ferenc Square, where locals and visitors congregate to see and be seen. No matter where you go, you’ll find plenty to keep you occupied in charming Budapest.

In the early 1990s Westerners flocked to Prague. Now momentum is shifting again, with Budapest taking a page out of the Czech Republic’s book on how to charm tourists, so much so that many people are considering Budapest to be rather like how Prague was in the early 1990s—a largely undiscovered, affordable urban and cultural wonderland.

Even the most dynamic of the leaders of the 1989 movements would be hard-pressed to have come up with a description of what changes they wanted exactly, let alone how close the changes that they have experienced were compared to the ideals for which they fought for.

Buda Castle and the banks of the Danube were declared UNESCO World Heritage Sites in 1987. Three churches and six museums are nearby to educate visitors on the local culture. From the must-see Buda Castle, there are great views of the city that has come so far, so quickly, and is on the cusp of something intangible, yet very special.