The Capital Region (Höfuðborgarsvæðið) of Iceland is the country's most populous and vibrant area, centered around Reykjavik, the world's northernmost capital city. It encompasses seven municipalities including Reykjavik, Kópavogur, Hafnarfjörður, Garðabær, Mosfellsbær, Seltjarnarnes, and Kjósarhreppur, together forming Iceland's cultural, political, and economic heart. The region blends dramatic volcanic landscapes, steaming geothermal pools, world-class museums, and a legendary nightlife scene unlike anywhere else on earth.
Best souvenirs
Authentic items worth bringing home.
Lopapeysa (Icelandic wool sweater)
The authentic hand-knitted circular-yoke sweater made from uniquely warm and water-resistant Icelandic lopi wool. Each pattern is different and they are Iceland's most cherished and practical souvenir.
Price: $80-250 (handmade) / $40-100 (machine-made)
Where: Handknitting Association of Iceland (Skólavörðustígur 19), Rammagerðin, Álafoss wool store in Mosfellsbær
Icelandic handmade ceramics
Local ceramicists create beautiful functional pieces inspired by Icelandic nature — volcanic rock glazes, northern lights colors, and lava-pattern textures
Price: $20-150
Where: Skólavörðustígur galleries, Kolaportið market, Kraum design boutique
Icelandic music (Björk, Sigur Rós, Of Monsters and Men)
Iceland punches far above its weight in music — vinyl records, CDs and digital downloads by famous Icelandic artists make unique cultural gifts
Price: $20-50
Where: 12 Tónar vinyl shop (Skólavörðustígur), selected music shops on Laugavegur
Icelandic pantry items
Skyr powder, dried fish (harðfiskur), Nói Síríus chocolate, brennivín schnapps, and lava salt make excellent edible souvenirs uniquely Icelandic
Price: $5-35
Where: Bónus/Krónan supermarkets, duty-free at Keflavik Airport, specialty shops on Laugavegur
Viking rune and Þórshammer jewelry
Sterling silver and gold jewelry featuring Viking symbols, Icelandic runes, the Vegvísir (Viking compass), and traditional Norse motifs crafted by Icelandic jewelers
Price: $30-300
Where: Orrifinn jewelry (Laugavegur), Kolaportið market, Harpa gift shop
Icelandic art prints and photography
Landscape photography of the Northern Lights, midnight sun, and volcanic terrain by Icelandic photographers makes beautiful wall art
Price: $20-200
Where: Gallery Fold (Rauðarárstígur), photography galleries around Old Harbour, Ingólfstorg market
Arctic Botanicals skincare
Icelandic skincare brands using local geothermal water, Arctic herbs, and organic ingredients — SKYN Iceland and similar brands are popular internationally
Price: $20-80
Where: Melon cosmetics stores, Kringlan Mall, downtown pharmacies (Lyfja)
Traditional markets
Where locals shop and travellers find treasures.
Kolaportið Flea Market
Reykjavik's beloved indoor flea market in a large harbor warehouse, selling vintage clothing, vinyl records, Icelandic antiques, books, handicrafts, and traditional foods including hákarl (fermented shark) and dried fish
Where: Tryggvagata 19, 101 Reykjavik (Old Harbour area)
Hours: Sat-Sun 11AM-5PM
Farmers Market (Bændabúðin)
Seasonal outdoor market featuring local farmers and producers selling fresh Icelandic vegetables, dairy products, homemade preserves, organic meat, and artisan food products
Where: Laugardalur, 104 Reykjavik
Hours: Saturdays 10AM-2PM (May-September)
Reykjavik Christmas Market
A magical Christmas market in the city center with handmade crafts, Icelandic foods, hot drinks, and a festive atmosphere complemented by the 13 Icelandic Yule Lads tradition
Where: Ingólfstorg Square and Austurvöllur, 101 Reykjavik
Hours: Daily 11AM-8PM (December only)
Shopping districts
Neighbourhoods known for retail.
Laugavegur
Reykjavik's 2km main street is lined with independent boutiques, Icelandic design stores, bookshops, outdoor gear shops, galleries, and souvenir shops alongside cafés and restaurants
Best for: Icelandic fashion, design, books, outdoor gear, unique gifts
Skólavörðustígur
The picturesque street leading up to Hallgrímskirkja is home to artist studios, galleries, the Handknitting Association, jewelry makers, and artisan shops
Best for: Handmade crafts, jewelry, lopapeysa sweaters, original art
Hafnarstræti / Old Harbour
The Old Harbour area combines seafood restaurants, art galleries, the Reykjavik Art Museum shop, and design boutiques in a picturesque waterfront setting
Best for: Design objects, photography prints, Icelandic food products
Mosfellsbær / Álafoss
The Álafoss wool store in nearby Mosfellsbær (15 min from Reykjavik) is the original Icelandic wool outlet with the largest selection of lopi yarn and lopapeysa sweaters at factory prices
Best for: Icelandic wool sweaters at the best prices, yarn for knitters
Malls & modern shopping
Air-conditioned, international brands, and food courts.
Kringlan Shopping Centre
Reykjavik's largest and most popular mall with 150+ stores including international brands, Icelandic retailers, a supermarket, food hall, cinema, and cafés. Located 2km east of city center.
Hours: Mon-Wed 10AM-7PM; Thu 10AM-9PM; Fri 10AM-7PM; Sat 10AM-6PM; Sun 1PM-5PM
Smáralind Shopping Centre
A large shopping center in Kópavogur with 80+ shops, restaurants, entertainment, and free parking — popular with families and those staying outside central Reykjavik.
Hours: Mon-Wed 11AM-7PM; Thu 11AM-9PM; Fri-Sat 11AM-7PM; Sun 1PM-5PM
Bargaining tips
Negotiate like a local.
Bargaining is not customary in Icelandic shops — prices are fixed at all retail outlets
Prices at Kolaportið flea market are slightly negotiable on antiques and vintage items
Tax-free shopping: non-EU residents can reclaim VAT (24%) on single purchases over 6,000 ISK — collect forms in-store and claim refund at Keflavik Airport
Duty-free shopping at Keflavik Airport (arrivals and departures) offers the best prices on alcohol, chocolates, and beauty products
Customs & restrictions
What you can and can't take home.
Restrictions: Do not export lava, rocks, or plants from Iceland's natural areas — this is illegal and culturally disrespectful
Tax Refund: VAT refund (24%) available for purchases over 6,000 ISK (~$44); complete Tax Free form in stores and claim refund at Keflavik Airport arrivals hall before departing
Duty Free: Arrivals duty-free allowance: 1L spirits + 1L wine + 6L beer (21+ only); tobacco: 200 cigarettes or 250g
Shipping: Most larger stores and galleries offer international shipping; Iceland Post (Íslandspóstur) handles standard parcels