The universal aspiration for a low cost of living paired with a high quality of life often reveals a complex dynamic. Mercer’s surveys show that these two metrics often align at opposite ends of the spectrum: cities with lower costs often struggle to offer a high quality of life, while those with superior living conditions tend to come with higher expenses. However, Luxembourg has consistently managed to strike a relatively good balance, demonstrating its appeal as a destination for international professionals and families, which is a key focus of Mercer’s rankings.
The Quality of Living City Ranking considers various factors such as political stability, healthcare, education, infrastructure and socio-cultural environment. Its counterpart considers factors like housing markets, high transportation costs, inflation and exchange-rate fluctuations.
Global trends
In the Quality of Living Index, Luxembourg City, the country’s capital, ranks 17th out of 241 cities, consolidating its exceptional living conditions. In previous ranking, it has mostly featured among the top 20.
Meanwhile, it secures 47th place out of 226 cities in the Cost of Living Index, reflecting its manageable living expenses compared to other high-ranking destinations. For instance, several neighbouring cities like Paris (29th), Berlin (31st) or Brussels (37th) were considered slightly more expensive.
As in previous rankings, cities like Hong Kong, Singapore, and Switzerland’s Zurich, Geneva, and Basel are the most expensive to live in. Conversely, Bishkek in Kyrgyzstan, Karachi and Islamabad in Pakistan, and Lagos and Abuja in Nigeria are ranked cities with the lowest living costs.
The Quality of Living Index presents a similar pattern, with Zurich, Vienna, and Basel occupying the top three spots for favourable living conditions. European cities dominate the top 20, with Luxembourg (17th) joined by Copenhagen (4th), Amsterdam (6th), Stockholm (18th) and others. At the opposite end of the spectrum, Bangui in the Central African Republic, Baghdad in Iraq, and Khartoum in Sudan rank as the cities with the poorest living conditions.
The cost-quality tradeoff
The report emphasises that “the most successful destinations today are those that blend flexible governance around mobile talent with a high quality of life and an affordable cost of living.” Several European Union cities, including Warsaw, Budapest, Zagreb and Ljubljana, exemplify this ideal balance.
However, some cities struggle to achieve this equilibrium. For example, Tel Aviv, Beijing, Dakar, Bangui and Kingston feature among destinations with high costs but low quality of life.
Luxembourg’s ability to offer exceptional living conditions at a fair cost solidifies its position as an ideal hub for both business and family life. Its rankings across Mercer’s indices reflect its appeal to those seeking both economic opportunity and an enriching lifestyle.