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Vienna holds top spot as city with highest quality of life

Vienna, the home of Mozart and Freud, has held on to its title as the city with the highest quality of life, according to the 2014 rankings of the best places to live and work by management consultancy Mercer.

Vienna was followed by Zurich, Switzerland, and Auckland, New Zealand. In fourth place was Germany's Munich while Vancouver, Canada, was in fifth -- the highest-ranked city in North America. Dusseldorf and Frankfurt, also in Germany, take sixth and seventh place.

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Mercer's annual survey is conducted to help employers work out what to pay and compensate their employees when placing them on international assignments.

"European cities enjoy a high overall quality of living compared to those in other regions," wrote Slagin Parakatil, a senior researcher at Mercer.

"Healthcare, 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."

London did not make the top 10, thanks to poor scores for its air pollution and traffic congestion. Mercer did note that London, which made it to 38th in the survey, did have world-class recreational facilities and a great selection of shops.

(Read more: The best cities to live for marijuana lovers)

Vienna, Austria
Peter Adams | Getty Images

Singapore was the highest-ranked Asian city, at number 25, while Dubai took top slot for the Middle East and Africa, although the UAE city was 73rd on the global list.

The highest ranking U.S. city was San Francisco, at 27th in the poll, while New York was at number 43. Bankrupt Detroit was the lowest-ranked U.S. city at 70th in the global list.

Baghdad in Iraq was once again last in the rankings, with Bangui in the war-torn Central African Republic and Haiti's capital Port-au-Prince placing in 222nd and 221st places respectively. Mercer's report provides information on over 460 cities while the rankings cover just 223.

Emerging metropolises

Aside from the cities at the top and the bottom, Parakatil said that the 2014 survey recognized "second tier" or "emerging" cities 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," Parakatil wrote in the report.

"Emerging cities will become major players that traditional financial centres and capital cities will have to compete with."

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For example, Wroclaw in Poland ranked 107th in the global rankings, and Mercer noted that since Poland joined the European Union in 2004 the city had seen "tangible economic growth, partly due to its talent pool, improved infrastructure, and foreign and internal direct investments." The city is set to be the European Capital of Culture in 2016.

In Latin America, U.K. soccer fans may be interested to note that the Amazonian city of Manaus, where England play their first FIFA World Cup game against Italy in June, is signaled out as an emerging city due to the creation of an enterprise zone.

"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," Mercer noted.

While these emerging cities offer positive stories for the future, Mercer warned that the Middle East and Africa still remained the most challenging regions for multinational organizations, citing regional instability and disruptive political events.

—By CNBC's Kiran Moodley. Follow him on Twitter @kirancmoodley