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Rio de Janeiro has long been associated with its magnificent beaches. Copacabana and Ipanema brought fame to Rio in the 20th Century for golden sands and the lush, forest-covered mountains that framed them. A no less captivating setting lies just above downtown Rio in the hillside neighbourhood of Santa Teresa, where aging 19th-century mansions and a bohemian spirit offer a very different take on the cidade maravilhosa (marvellous city).

Named after the Carmelite convent founded there in the 1750s, Santa Teresa remained largely inaccessible until the 1800s when new roads connected it to the bayside neighbourhood of Glória and other nearby districts. Until the 1880s, it was an area of scattered farms and untrammelled forests that were a refuge for runaway slaves. Then in the late 19th Century the explosive growth of the coffee industry fuelled a building boom across Rio, with wealthy industrialists erecting huge mansions in Santa Teresa. The area took off in 1896, when the Roman-inspired aqueduct that brought water to the city centre was transformed into tracks for Rio's new electric tram, the bonde.

Today the quaint yellow bonde - the last streetcar still operating in Rio - continues its run over the old aqueduct (today called the Lapa Arches) and winds its way up into the cobblestone streets of Santa Teresa. Along the way, tram-riders, sometimes clinging for dear life, jostle past the old mansions - some beautifully restored and others crumbling, vestiges of the belle époque. Following its boom days, Santa Teresa fell into neglect, when Rio's favelas (slums) spread onto the nearby hillsides and crime drove the wealthy to southern neighbourhoods far from the city centre.

In the 1960s and '70s, artists, writers and musicians moved into the dilapidated area, restoring some of the aging houses and breathing new life into the neighbourhood. They opened studios and hosted creative events - Afro-Brazilian drumming in the streets, art walks - that gave the district its reputation as a vibrant, but still edgy, arts district. Today the revitalization continues - albeit with fiscal rather than artistic goals - as a growing number of trendy boutique hotels open their doors.

At the same time, Santa Teresa has managed to retain its friendly, village-like vibe. The Largo dos Guimarães, a tiny plaza where the bonde stops, is the heart of small-town Santa Teresa. The largo is an important meeting point for some of Rio's best-loved carnival street parades. From here, it is a short stroll to bohemian-loving eating and drinking spots like Bar do Mineiro, a down-at-the-heels local favourite that serves classic Brazilian bistro fare. Other restaurants, like Espirito Santa, which serves dishes from the Amazon, have windswept terraces overlooking the city. Nearby are handicraft shops, a handful of galleries and a petite tile-lined grocer who has survived the neighbourhood's many changes over the years.

A 10-minute walk from the bonde stop are two of the neighbourhood's star attractions. The Parque das Ruinas contains the burned out shell of the mansion belonging to Brazilian heiress Laurinda Santos Lobo, whose house was a salon for Rio's artists and intellectuals in the 1920s and '30s. Left in ruins, the old brick exterior has metal walkways that ascend to a cupola with fine views over Guanabara Bay and downtown Rio. Next door is the Museu Chacara do Ceu, with a small but well-curated collection of artwork, including pieces by renowned Brazilian artist Di Cavalcanti and international luminaries like Matisse and Miró. The lush gardens provide a shady retreat from the hot streets below.

Where to stay
The bed-and-breakfast network Cama e Café offers a unique overnight experience. Local residents rent rooms out of their homes - some of which are set in antique-filled colonial mansions with idyllic gardens. Doubles from R$110 (£42).

The Hotel Santa Teresa is one of Rio's finest boutique hotels, with artfully designed rooms, an award-winning restaurant, a full-service spa, a stylish bar and a pool with views over the city. Doubles from R$750 (£284).

© 2011 Lonely Planet. All rights reserved. The article ‘Bohemian Santa Teresa’ was published in partnership with Lonely Planet.

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