IT’S said of Istria, the peninsula that hangs from Croatia’s northernmost tip, that in every home there is a drawer containing seven flags.

The story goes that each time a different army invaded, residents would simply hang out the appropriate flag. Not surprising in a region that has changed hands more times than a used Mercedes; from the Germans to the Venetians to the Austrians to the French, to the Austrians again, on to the Italians then finally into Tito’s Yugoslavia. It wrenched itself free of the lot of them, and was reborn as part of the newly formed Croatia in 1991.

Istria was desirable because of its ports — Porec, Pula and Rovinj — but inland it was usually dismissed as a rump of land with not much to offer. We Brits have re-embraced parts of Croatia — the Dalmatian coast and Dubrovnik, and the islands of Brac and Hvar — but Istria isn’t seeing the same surge in visitor numbers.

The Germans charged back in, and coastal resorts such as Porec and Rovinj are dominated by German tourism, but more savvy visitors, mostly British, are discovering that inland Istria combines a landscape of lush green hills and honey-coloured hilltop towns reminiscent of Umbria, and with the kind of tranquillity you’d only find in Tuscany on a rainy day in February.

Villas, dilapidated cottages, crumbling farmhouses; all are changing hands, as British buyers compete with returning Croatians to own their own piece of the Istrian idyll. The Croatian diaspora — some 4.5 million, the same number as the country’s indigenous population — stretches as far as Canada and Australia, and many Istrians are now returning to set up businesses in the tourism sector. “It is wonderful to be home,” says Dorina Vlakancic, who has returned with her husband after 15 years in the UK.

Their newly built villa, Casteletto Parenzana, was only finished in June and they have already had their first guests. “There is nowhere else in Europe so peaceful,” says Dorina. “At night we just sit out and watch the stars; although we have been back from England for some time, we still can’t believe the night skies.”

Evenings at Parenzana are glorious; the heat of the day fades, the sun slips slowly behind khaki hills and the sky floods fuschia pink. Istrian earth is lush and fertile, and fields of crops stretch between clusters of toffee-coloured cottages. Silent hamlets freckle the countryside; some have only one or two inhabitants, elderly now, sons and lovers long gone, some to the war, some to work on the busy coastal strip.

Families who remain make a living from the earth; across the road from Parenzana, a man ploughed his fields while his wife and mother leant together on a battered pitchfork, silently watching the earth turn beneath the fading sun.

The verdant hills that roll through Istria are scattered with towns; Venetian Motovun, Groznjan with its artists’ community, Oprtalj with its 17th-century loggia and tiny medieval streets winding up to the peak. The villages may play host to tourist coaches by day, but nothing on the scale of Provence or Tuscany; by late afternoon they have settled back into a peaceful languor, with only the odd quiet bar, serving menestra (an Istrian take on minestrone soup) and cevapcici (meatballs) to locals and a few stray tourists.

“Istria is an oasis — rural and unspoilt,” Dino Omrcen told me, as he drove me around the countryside, “and this is rare in the Med now, so people want to buy. These are very exciting times for us, people are making good money, and life is coming back to villages that were dying away.” Dino’s company rents villas, but also helps foreign investors buy, design and restore their properties.

“Last year I had ten villas with pools, this year 30, next year we think it will be 60. But this is soft tourism, the numbers are still small. Mass tourism will stay on the coast.”

“Soft tourism” is a suitably gentle term for the development taking place in Istria; a wine route has sprung up, truffle-hunting trips are on offer, and most hilltop towns hold festivals in the summer, but all are low-key initiatives; the main attraction is the beauty and simplicity of the region.

“We had no idea it would be so gorgeous,” Jane Shirley told me, who was staying in a villa called Captain Morgan’s with her husband, Paul, and four children. “We’ve been to Porec, but it was like any other beach resort. Up here it’s unique; so quiet and everyone in the village so friendly. We chose Istria because it was that bit cheaper than Spain or Italy, but the villa is more luxurious than anything we’ve rented before.”

Times recommends

• New York's top 10 new hotels
• A Scottish monastery retreat
• Welcome back to Rwanda