While his re-imagining of The Cherry Orchard moves the action from pre-Revolutionary Russia to 1980s Pembrokeshire, the essence of playwright Gary Owen's adaptation remains the same. It is a time of uncertainty and upheaval, a Margaret Thatcher Britain slowly getting torn apart by class inequality. In the centre of it all is Bloumfield, a manor house that was once highly respected but now sits on the brink of repossession. Owner Rainey is forced back to the house to make things right, but the ghosts of the past continue to haunt her.

Both in tone and scale this third collaboration between Owen and artistic director Rachel O'Riordan is a significant shift from Iphigenia in Splott and Killology. Moving from the studio space to the main house brings with it an entirely new set of logistical and creative challenges, and the writer-director team rises to them spectacularly. Retaining the family dysfunction and narrative suspense in Chekhov's original was arguably the easy bit – what really stands out about Owen's script is the humour. For all its heartbreak and melancholy, Owen's adaptation is laugh-out-loud funny.

The primary reason for that humour being so pronounced is the depth each one of the seven principle characters has. They are beautifully written, yes, but you can clearly see the work put in by director and cast to mine their physicality. The audience believes every argument, every moment of happiness, every ounce of melancholy.

The cast are relishing this production, and kudos should go to O'Riordan for her casting choices. Denise Black shines as Rainey, stamping around Kenny Miller's beautifully designed set with a drink in her hand and a cutting insult on the tip of her tongue. On the other side of this class divide is Dottie, played by Alexandria Riley. Fast becoming one of Wales' top actors, she proves it here with a performance that is full of humour and angst. Matthew Bulgo is appropriately infuriating as the disturbing presence, and scenes between he and Black are some of the best. Richard Mylan is solid as Ceri but, unlike the rest, he doesn't seem to have an emotional journey. More expositional than driving the narrative, Ceri should represent the future of Britain but the characterisation is misguided.

Lighting (Kevin Treacy) and sound design (Simon Slater) blend well together to create a sense of impending dread. The sound of waves from the Pembrokeshire coast feel ominous and, ultimately, they are. Treacy's use of blues and yellows turns the second act of the play into a ghost story of sorts – the characters are constantly running away from the past, present or future and, in this haunted house, they're unable to escape.

It's unfair to compare The Cherry Orchard to previous collaborations between Owen and O'Riordan, because of how different the production is. Much closer in style and length to A Doll's House, this is certainly the superior piece. Where Ibsen's play dragged in the middle, the three-hour running time here hurtles by. Owen's play is a thoroughly engrossing and entertaining watch – though the last image may be a tragic one, it's the laughter that will linger from this Sherman success.

The Cherry Orchard runs at Sherman Theatre until 3 November 2017.