According to the “2014 Quality of Living Survey,” European cities dominate the list of the best places to live. Zurich and Auckland follow in second and third place, respectively. Munich is in fourth place, followed by Vancouver, which is also the highest-ranking city in North America. Globally, Singapore is the highest-ranking Asian city, whereas Dubai ranks first across the Middle East and Africa. The city of Pointe-à-Pitre, Guadeloupe, takes the top spot for Central and South America.

Mercer conducts the survey annually to help multinational companies and other employers compensate employees fairly when placing them on international assignments. Hundreds of cities around the world are reviewed for the survey.

“Political instability, high crime levels, and elevated air pollution are a few factors that can be detrimental to the daily lives of expatriate employees, their families, and local residents,” says Slagin Parakatil, senior researcher at Mercer, based in New York. “To ensure that compensation packages reflect the local environment appropriately, employers need a clear picture of the quality of living in the cities where they operate.” 

Parakatil adds that in a world economy that is becoming more globalized, cities beyond the traditional financial and business centers are working to improve their quality of living so they can attract more foreign companies. “This year’s survey recognizes so-called ‘second tier’ or ‘emerging’ cites and points to a few examples from around the world. These cities have been investing massively in their infrastructure and attracting foreign direct investments by providing incentives such as tax, housing, or entry facilities. Emerging cities will become major players that traditional financial centers and capital cities will have to compete with.”

Best and Worst in Europe

Vienna is the highest-ranking city globally. In Europe, it is followed by Zurich, Munich, Düsseldorf and Frankfurt.

“European cities enjoy a high overall quality of living compared to those in other regions. Health care, infrastructure, and recreational facilities are generally of a very high standard. Political stability and relatively low crime levels enable expatriates to feel safe and secure in most locations. The region has seen few changes in living standards over the last year,” says Parakatil.

Tbilisi, Georgia, is the lowest ranking city in Europe. However, it continues to improve in its quality of living, mainly due to a growing availability of consumer goods, improving internal stability, and developing infrastructure. Other cities on the lower end of Europe’s ranking include Minsk, Belarus; Yerevan, Armenia; Tirana, Albania; and St. Petersburg, Russia.

Best and Worst in the Americas

Canadian cities dominate North America’s top-five list. Ranking fifth globally, Vancouver tops the regional list, followed by Ottawa, Toronto, Montreal and San Francisco. The region’s lowest-ranking city is Mexico City, preceded by four U.S. cities: Detroit, St. Louis, Houston and Miami.

Ed Hannibal, partner and global consulting leader for Mercer’s mobility practice, says that, on the whole, North American cities offer a high quality of living and are attractive working destinations for companies and their expatriates. “A wide range of consumer goods are available, and infrastructures, including recreational provisions, are excellent,” he says.

In Central and South America, the quality of living varies substantially. Pointe-à-Pitre, Guadeloupe, is the region’s highest-ranked city followed by San Juan, Montevideo, Buenos Aires and Santiago. Manaus, Brazil, has been identified as an example of an emerging city in this region due to its major industrial center, which has seen the creation of the “Free Economic Zone of Manaus,” an area with administrative autonomy giving Manaus a competitive advantage over other cities in the region. This zone has attracted talent from other cities and regions with several multinational companies already settled in the area and more expected to arrive in the near future.

“Several cities in Central and South America are still attractive to expatriates due to their relatively stable political environments, improving infrastructure, and pleasant climate,” says Hannibal. “But many locations remain challenging due to natural disasters, such as hurricanes often hitting the region, as well as local economic inequality and high crime rates. Companies placing their workers on expatriate assignments in these locations must ensure that hardship allowances reflect the lower levels of quality of living.”

Best and Worst in Asia Pacific

Singapore has the highest quality of living in Asia, followed by the four Japanese cities of Tokyo, Kobe, Yokohama and Osaka. Dushanbe, Tajikistan, is the lowest ranking city in the region. Parakatil comments, “Asia has a bigger range of quality-of-living standard among its cities than any other region. For many cities, such as those in South Korea, the quality of living is continually improving. But for others, such as some in China, issues like pervasive poor air pollution are eroding their quality of living.”

With their considerable growth in the last decade, many second-tier Asian cities are starting to emerge as important places of business for multinational companies. Examples include Cheonan, South Korea, which is strategically located in an area where several technology companies have operations. Over the past decades, Pune, India, has developed into an education hub and home to IT, high-tech industries, and automobile manufacturing. The city of Xian, China, has also witnessed some major developments, such as the establishment of an “Economic and Technological Development Zone” to attract foreign investments. The city is also host to various financial services, consulting, and computer services firms. 

Elsewhere, New Zealand and Australian cities rank high on the list for quality of living, with Auckland and Sydney ranking 3rd and 10th, respectively.

Best and Worst in Middle East and Africa

Dubai is the highest-ranked city in the Middle East and Africa region, followed by Abu Dhabi, UAE; Port Louis, Mauritius; and Durban and Cape Town, both in South Africa. Durban has been identified as an example of an emerging city in this region, due to the growth of its manufacturing industries and the increasing importance of the shipping port. Generally, this region dominates the lower end of the quality of living ranking, with five out of the bottom six cities. Baghdad has the lowest overall ranking.

“The Middle East, and especially Africa, remain one of the most challenging regions for multinational organizations and expatriates. Regional instability and disruptive political events, including civil unrest, lack of infrastructure, and natural disasters such as flooding, keep the quality of living from improving in many of its cities. However, some cities that might not have been very attractive to foreign companies are making efforts to attract them,” says Parakatil.

Data for the survey was largely collected between September and November 2013, and is updated regularly to take account of changing circumstances. In particular, the assessments are revised to reflect significant political, economic and environmental developments.

More information about the survey, including how to order a report reviewing its results, can be found here.