Image: Punta del Este, Uruguay © Radius Images, Corbis

Sipping a cappuccino at a small table in a shady plaza outside my hotel, I'm reminded of days and evenings spent in similar sidewalk cafés in Europe. Stately 19th-century neo-classical and baroque-style buildings with wrought-iron balconies line the square. Curtains wave gaily through massive wood-framed windows.

Across the street, the famous 18 de Julio Avenue -- and another shady plaza -- are rimmed with shops selling clothes, housewares and electronics, currency-exchange outlets, and even more sidewalk cafés offering pastas, pizzas and chivitos. (A chivito is akin to a Philly cheesesteak, piled high with ham, bacon, lettuce, tomato, cheese, a fried egg, slathered with sauce, and all atop a bed of french fries. Take that, dear arteries!)

I order another coffee and sit back to savor the moment -- no need to rush. As in European cities or neighborhoods of Manhattan or Chicago, whatever I need or want can be had within these 10 square blocks of Montevideo.

Expats in Uruguay say they have the best quality of life in Latin America

I was just getting started on my expedition to Uruguay's coastal cities and towns, but already I could understand why so many expats living in this country say it offers the best quality of life in Latin America.

The drive along the rambla (shoreline road) from the airport takes you past chalet-style homes with tidy manicured yards on the outskirts, giving way to stylized high-rise condo buildings nearer the city.

Just before sunrise, joggers and dog walkers were about their morning rituals. Silver streaks of light crisscrossed the massive body of water next to which Montevideo sits. Is it an ocean? A river? A little of both, it seems. About midway between west and east on Uruguay's southern coast, Montevideo hugs the bank where the Río de la Plata rushes out to the Atlantic Ocean. Nearly half of Uruguay's total population of 3.5 million people live here, in the country's capital, making for a manageable, not-too-big and not-too-small city.

While Montevideo's seven-mile coastline is not technically "oceanfront," it looks like the ocean. Beaches are wide and sandy, and waves and tides come in and out. During my visit -- at the height of the Southern Hemisphere summer -- beaches were thick with sunbathers and water lovers.

The city itself is easy to navigate, and public transportation is first-rate. Buses are new and clean, and they run consistently on time. Fares are less than a dollar, in most cases, to get just about anywhere in the city. (Cross-country buses are equally clean, comfortable, inexpensive and free-WiFi-enabled.)

I took a bus to the pretty Plaza Independencia, with its massive statuary tribute to national hero José Artigas. From here, you can easily walk from one end of Ciudad Vieja -- Montevideo's oldest neighborhood, founded in 1726 -- to the other in about 30 minutes via the pedestrian walkway called Calle Sarandí.

But it will take hours if you pause to gawk, as I did, at the many gorgeous historical buildings. These include the Cabildo, the former government building, the Casa de Gobierno, where the current government meets, and the pristine Solís Theater, the oldest operating opera house in the Americas.

Ciudad Vieja's architecture is a reminder of the city's colonial past. (The Portuguese, Spanish, French and British all tried to stake claims here at one time or another.) Many of the old buildings, especially along Calle Sarandí, have been renovated in recent years.

Antique shops, art galleries and boutiques occupy ground floors, with upper floors home to stylish one-of-a-kind apartments with shuttered windows and beckoning sunny balconies.

Go a few blocks either direction from Calle Sarandí, and you can find wonderful old buildings still in need of renovation. It's a popular investment strategy to buy an entire building, restore it and sell each unit separately.

If you're interested in doing this, plan on spending $315 to $630 per square meter (about $30 to $60 per square foot) or even more -- closer to $100 per square foot -- for a high-end overhaul. Keep in mind that these costs will vary with the exchange rate between the U.S. dollar and the Uruguayan peso, which is currently at a bit less than 20 pesos to one U.S. dollar. (Real estate in Uruguay is typically priced in U.S. dollars.)

If you want to buy an already-renovated apartment in Ciudad Vieja, you'll pay, on average, about $200 per square foot. Since apartments tend to be small, the total price won't be exorbitant. For example, I saw a one-bedroom unit in a building constructed in 1861 -- it's 645 square feet, and it comes with a garage. The asking price, fully furnished, is $123,000.

Despite the aesthetic appeal of Ciudad Vieja, most expats I met in Montevideo prefer living in the trendy neighborhoods of Pocitos and Punta Carretas. I could understand why. Both border the city's best beaches, and Pocitos, especially, has an urban neighborhood feel.

"Pocitos reminds me of the Riviera or Italy or elsewhere in Europe," says Doug Wayne, a U.S. expat who has lived all over the world but moved to Uruguay nearly three years ago. "It's completely self-contained, with little shops and restaurants and its own night life. There are shady little parks, and we're right next to the water. You can walk everywhere; you don't need a car."

Pocitos is where the Friday "English" night takes place, bringing together expats and locals who want to practice their English. Pocitos is also where you'll find lots of rental apartments. Most are smaller one-bedroom units that rent from $1,000 to $1,500 per month, but I found a 450-square-foot, one-bedroom apartment with great sea views, thanks to its ninth-floor location, renting for $600 per month.

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