In the Swiss playwright Friedrich Dürrenmatt’s masterpiece Die Physiker, the head of a psychiatric unit is revealed to be totally and utterly mad. There were elements of that in Armel Opera Festival’s production of The Magic Flute, visiting the Hackney Empire this weekend. This was the first time I had come across the Hungarian festival, which has been running since 2008 and combines the creation of new productions with a competition, but on the strength of this co-production with the Szeged National Theatre, I’d like to see more.

Director Róbert Alföldi relocates the opera to the wing of an asylum; dirty grey tiles on the ground level with glass doors and a large shower in the corner, a padded layer on the first floor. As the overture plays, Tamino is dragged in by the Three Ladies – here sadistic nurses – raving, screams ripping across the music and the first word we hear is “scheiße”. It is, in many respects, a brutally uncompromising production and highly effective: Tamino struggles not with a snake, but the long twists of a hose; the lady trio’s lustful musings on him take on a more sinister character through the new power dynamic created by the practitioner/patient scenario, as do Monostatos’ attempts to rape Pamina. The war between the Queen of the Night – here a doctor with a penchant for dance moves – and Sarastro can be taken as a war for the hospital and a battle between different treatments. There’s even a children’s ward represented by the Three Spirits in pink hospital smocks.

The whole concept is revelatory, even if by making so many of his own points and tapping into the huge contemporary issues of mental health and abuse of power, Alföldi loses something of Mozart’s own imagery. He has so many brilliant touches though. Papageno’s bells, for example, become a bottle of tablets that halt the pill-popping Monostatos and his cronies in their tracks. Sarastro’s triumph over the Queen of the Night is finalised by an enforced injection, prompting immediate pacification and a loopy grin.

What was really striking was the level of care taken by both director and the cast to create the various depictions of insanity; Pamina is prima inter pares as a wreck with nervous jerking gestures, a constant flutter on her fingers and an entirely believable fascination with the scalpel that her mother gives her as a weapon against Sarastro. Yet in this bleak, visceral staging there’s not that absence of mirth that so often causes a Mozart production to self-destruct. There is humour, black though it might be, and Alföldi’s nose for combining bathos and pathos drew plenty of guilty laughter.

Musically the production was also a success. Éva Kovács gave a memorable performance as Pamina, combining the character depiction mentioned above with a girlishly simple soprano, silvery all the way through and with a higher register which, once warmed up, had a palpable strength to it, most touchingly deployed in “Ach, ich fühl's”. There are one or two rough edges to be smoothed out, but the fundamental vocal clarity and expressive phrasing together with an obvious ability for character acting makes her one to watch. György Hanczár’s smooth tenor was a good fit for Tamino and the way he made his tenor grow in strength as the character developed was a good move, moving from a pale insecurity at the beginning to a vibrant and energetic lyricism by the end of the first act. A slight tendency to force the voice at the top needs to be monitored. Quality of acting was again wholly convincing – his terrified confusion at the beginning was particularly raw. How both he and Kovács were able to sustain beauty in their voices given the amount of screaming that was directed is a mystery.

Szilveszter Szélpál’s Papageno appeared grunting and muttering gibberish; he caught imaginary birds and nearly assaulted Pamina, but was sung with a colourful, even-timbred baritone which had some power to the lower register. His dive into the audience wouldn’t have worked in a larger venue, but was cheerfully unaffected. Marlene Assayag gave a strong performance as the Queen of the Night with a “Der Hölle Rache” that showed off fearless coloratura, largely unforced at the very top. István Kovács’ Sarastro had his white coat buttoned a little too tightly; he lacked a certain warmth and “O Isis und Osiris” was slightly unfeeling, but “In diesen heil'gen Hallen” had a more optimistic tone and he showed a pleasantly gravelly lower register.

Gregory Vajda drew a rich, fleet sound from the Szeged Symphony Orchestra; dramatic tempi balanced with a sensual appreciation for the score’s longueurs and an obvious care for the singers. This was a highly impressive performance from all parties that won’t easily be forgotten.