When, in the late 1800s, King Chulalongkorn signed a treaty with British merchants giving them access to the Siam kingdom’s vast teak and rosewood forests and permitting them to live in the genteel northern city of Chiang Mai, he had one condition: that the foreigners and their entourage reside on the far side of the Ping River, away from the native Thais and Chiang Mai’s ancient city ruins.

Britain, the colonial rulers of neighbouring Burma and British Malaya, had already signed an agreement recognising what is now the kingdom of Thailand’s sovereignty. But the Thais, well versed in the crafty tactics of Britain’s colonial system, preferred the extra precautions of keeping the foreigners an arm’s length away.

The British and their entourage settled in Wat Gate, a leafy neighbourhood flanking the eastern bank of the Ping River that is named after a Buddhist temple complex in the vicinity. They planted towering trees and lush gardens and built stilted wooden houses adapted for Chiang Mai’s sultry summers with low-hanging latticed eaves, slated shutters and shady verandahs.

Wat Gate is undergoing a revival. A string of designer boutiques and galleries have been opening in the old wooden houses lining Charoenrajd Road, the borough’s main thoroughfare, with cafes and bakeries tucked under the gangly limbs of the old trees.

Wat Gate’s most newsworthy opening is 137 Pillars House, a stunning luxury hotel built around a house belonging to Louis Leonowens, a British merchant who was best known for being the son of Anna, the schoolteacher whose friendship with King Chulalongkorn was immortalised in the film Anna and the King. Built in 1889, the rambling espresso-coloured teak house with latticed wooden eaves and a sweeping tile roof supported by 137 pillars now stands as the hotel’s lounge and bar. The 30 guest rooms are spread throughout newly built two-storey colonial-style bungalows scattered around the perimeter. Each is furnished with four-poster beds, separate dressing rooms, claw-foot bathtubs and rattan planter’s chairs set on balconies shaded by ancient bodhi trees.

Artefacts from the old pillared house now reside at the Wat Gate Museum, a musty hall packed with vintage curios and traditional lacquerware in the peaceful grounds of the Gate Karam temple nearby. Most of the collection is a bit dry, but the elephant bones and a rather grotesque series of photos showing vivid early 20th-century beheadings in Chiang Mai manage to raise a few eyebrows. While there, take a peek at the old temple, an ornate prayer hall (closed to women) whose exterior walls are richly adorned with gilded apsara dancers and dragon friezes.

For shops, continue through to Charoenrajd Road, where an exceptional collection of boutiques and galleries offer goodies from local designers and northern Thailand’s many hill tribes. Sop Moei Arts (150/10 Charoenrajd Road; sopmoeiarts.com) started in 1977 with the Swedish International Development Agency to provide income for Karen minorities living in Mae Hong Son Province. It’s all gorgeous, but the rich maroon bamboo baskets, Chinese teapots and wall hangings inspired by “pha tung”, fabric banners hung to celebrate temple festivals, are keepers.

At the Colour Factory (154-156 Charoenrajd Road; colourfac.com), Philippine-born Miguelle La Salle sells the adorable hand-painted elephant figurines from Elephant Parade, a Dutch organisation that raises funds to help the endangered Asiatic elephant. Miss China is a pretty-in-pink elephant with red lipstick and a flower on her head; Delightful Durian is a sunflower-yellow elephant peeking out of a cracked durian shell. Head upstairs for La Salle’s stylish collection of leather handbags and purses.

Next door, Lan La Moon (160 Charoenrajd Road; +66 53 266 263) has smart hand-formed ceramic cups and bowls in subdued beige and sand colours, hand-woven shawls with natural dyes and tribal-inspired jewellery, all by artisans living in the nearby hills.

Opposite, Crafitti (173 Charoenrajd Road; crafittijewelry.com) offers dainty handmade earrings, bracelets and pendants studded with beads, all in a charming old wooden house.

At the Circle Source (86 Charoenrajd Road; +66 53 302 719), German-born Klaus Dietrich makes paper products from renewable plants, such as banana, cotton and sugar cane. While there, check out Dietrich’s collection of papers from across Asia, including one formed using soft shells from the Philippines.

A stone’s throw away from Charoenrajd Road, the Healing Family Foundation (2 Nawatket Road; hffcm.org) was established in 2005 as a safe space for disabled children to play and learn handicraft traditions. Run by their parents and overseen by a group of Japanese artists, welcoming Baan Sanook (meaning house of fun) churns out colourful elephant T-shirts, picture frames and tablecloths, with proceeds used to fund the centre.

The best lunch spots are on the narrow winding lanes shaded by gigantic rain trees fanning away from the Ping River. The Hinlay Curry House (8/1 Nawatket Road; +66 53 242 621) hits all the right notes with its laid-back hippie vibes and obliging staff. Order the slightly sweet pumpkin curry spiced with mustard seeds and turmeric and the Madras beef curry, a milder but perfectly spiced version of the south Indian treat, both sopped up with flaky roti breads. Best of all are the prices, with lunch for two costing about 300 baht ($9).

For Thai food, head to Green O’Clock (10 Kaewnawarat Soi 2; greenoclock.com), a dinky wooden house with big lawns and peculiarly styled tables and chairs tucked under a shady canopy of trees. Join the mainly young and hip Thai clientele for classic dishes such as pad thai, and pork stir-fried with Thai basil.

Top it all off at Bake & Bite (Kaewnawarat Soi 3/2; +66 53 249 689), a bakery snuggled amid lush gardens. Pick from its range of healthy biscuits and cakes and savour the silence at one of the outdoor tables. Afternoon tea spreads cost from 220 baht a person or 350 baht for two.

Staying there

137 Pillars House has double rooms from 6302 baht ($197); see 137pillarshouse.com. The hotel produces pocket guides to the Wat Gate neighbourhood that are available from the concierge.

This article appeared in the November 14, 2012 edition of the Sydney Morning Herald and Age newspapers.