Sandwiched between Brazil and Argentina and bordered by the Atlantic Ocean, Uruguay is the second smallest South American country. Although it may be tiny in terms of size and population – just 3.5 million people live here – it punches well above its weight in so many other areas. The locals love to boast that the country offers the best wine, beef, arts scene and beaches in South America! Uruguay is also one of the safest and wealthiest countries in South America, so it’s the perfect place for first-time visitors to the continent. The main draws are Montevideo, the culturally rich capital, the colonial treasures of Colonia del Sacramento, the fertile interior and the stunning Atlantic Ocean beaches. Come Uruguayan summertime in December, the jetset descend on Punte del Este to celebrate the festive season. It’s just one long party, so why not join in?

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PUNTA DEL ESTE

This is the Southern Hemisphere’s hedonistic hotspot – a slice of Miami, Cancun, Ibiza and St Tropez all rolled into one. Punta del Este is actually the collective name for three small towns (Punta, La Barra and José Ignacio) strung along a 30-mile peninsula, 87 miles east of Montevideo. 

Action centres on Punta, a mix of  palatial hotels such as the Conrad Punta del Este Resort & Casino, high-rise condos and upscale restaurants. Look out for the striking modern artwork around town, such as the giant concrete hand coming out of the sand! Wander around the streets of Beverly Hills – no, really! It’s home to picture-perfect Hockney-style apartments and pine-dotted gardens. Catering to the well-heeled crowd, Avenida Juan Gorlero is lined with designer stores – be warned, though, some don’t open until the evening. For mall addicts, Punta Shopping on Avenida Roosevelt offers a 100 stores, while you can pick up souvenirs at the evening weekend crafts market on Plaza Artigas.

If you don’t want to stay in town, head six miles away to the secluded shores of Laguna del Sauce. Check into Hotel del Lago, a low-rise hotel with a lovely pool and golf course. Or drive 15 miles north of Punta and you’ll reach José Ignacio, a tiny fishing village where privacy-loving celebs hang out. You’ll find them staying at the chic La Posado del Faro hotel and enjoying lunch on the beach at La Huella. The lobster and fresh fish was to die for and OK! was quite taken with the sultry waiting staff! Shakira regularly dines here – and now we know why!

COLONIA DEL SACREMENTO

For culture vultures and history buffs, a visit to Uruguay’s oldest city, Colonia del Sacramento, located to the west of Montevideo, is a must. This is a Havana-esque haven of vintage cars, brightly painted houses and cobbled streets lined with local craft and antiques stores, while the picturesque lighthouse will give you a serious workout to reach  the top! Enjoy the city’s UNESCO-listed colonial delights by basing yourself at the Sheraton Colonia Golf & Spa Resort, a spacious, modern hotel on the edge of town. After a day’s sightseeing, OK! enjoyed sunset cocktails while overlooking the palm tree-lined swimming pool.

In total contrast, book a stay in a traditional family run estancia such as La Vigna in nearby Colonia Valdense. Featuring beautiful painted shutters, wooden floors and beds draped with muslin canopies, La Vigna is truly a haven of serenity, homemade treats and rural activities away from the fast pace of life. In fact, TVs are banned and the use of mobile phones is frowned upon – you have been warned!

MONTEVIDEO

Montevideo is an enticing mix of bold high-rises, beautiful 19th century neo-classical buildings, vibrant cafés and pulsating clubs. The city offers an eclectic music and arts scene and is home to the world’s longest carnival, spanning 40 days from January to March. OK! stayed at the Radisson Montevideo Victoria Plaza Hotel, a hotel so central that one of the city’s best shopping malls is in its basement! Bargain hunters, however, should make a beeline to the Mercado de los Artesanos, where you can pick up well-priced clothing and leather goods from the maze of indoor stalls.

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If you’re a carnivore, Uruguay is the place for you! An atmospheric place to try grilled meat is the grand Mercado del Puerto – the enticing aromas will hit you long before you reach the wrought-iron entrance gates. OK! also stopped off to devour some tasty morsels at Cabaña Veronica. If you prefer smaller tapas-style dishes, dine at the chic Walrus eatery in the World Trade Center. Wherever you are try mate – a Uruguayan ‘tea’ served in a gourd husk and drunk through a metal straw. OK! did this at El Facal while watching the locals tango on the street outside to the sounds of local musicians.

WHAT MUST I DO?

Uruguay boasts an excellent wine industry. OK! was dazzled by the quality of Tannat, the ubiquitous red wine, and did some additional research at the Juanico Estate, a vinery that dates back to 1755. Here we strolled through the 250-acre vineyard and nosed around the cellar, before sitting down to taste.

Another must-do is to visit a traditional family run ranch (estancia). Spend a couple of days at El Charabon – a 950-hectare working estancia near the Atlantic coast, surrounded by the Sierras de Rocha mountains. Sleep in the cute guesthouse and spend your days horse trekking or herding cattle with the resident gaucho Fernando. OK! went home having learnt the cumbia – an easier version of the tango, as taught by Fernando!

WHICH STARS MIGHT I SEE?

It wouldn’t be a chic holiday hotspot if Naomi Campbell hadn’t visited! She’s stayed at the luxury Conrad Punta del Este Resort & Casino, as has fellow supermodel Gisele Bündchen, Mario Testino and Hugh Jackman. Colombian hip-shaker Shakira owns a farmhouse in La Colorada in Punta del Este that includes a recording studio. The recently opened Hotel Fasano Las Piedras has attracted everyone from Ronnie Wood to the Crown Prince of Saudi Arabia.

HOW DO I GET THERE?

Air Europa (0871 423 0717; www.aireuropa.com) offers daily flights from London Gatwick to Buenos Aires via Madrid from £650.50, including taxes. Price based on December 2011 departure. Various airlines connect Buenos Aires with Montevideo and there are regular fast ferries that connect Buenos Aires with Uruguay. You can also fly direct from Buenos Aires to the tiny Laguna del Sauce airport in Punta del Este with Uruguayan airline Pluna. Last Frontiers UK (01296 653 000; www.lastfrontiers.com) can tailor-make itineraries to Uruguay and the rest of Latin America.