Egilsstadir, Iceland

Capital City

This tiny Icelandic town of 2,303 people is hardly the cosmopolitan haven some expats dream of. The bureaucracy is a persistent headache, and the climate is downright chilly, even by Icelandic standards. Egilsstadir sits in a subarctic or subpolar oceanic climate, with winters colder than other parts of the country and summers that barely top 15°C.

Still, the town has grown rapidly in recent decades, fueled by the construction of a hydropower plant and aluminum smelter in the region. Egilsstadir now serves as the main transportation and administrative hub for East Iceland, with an airport, gymnasium, and health clinic. But the growth has slowed markedly since the 2008 banking collapse.

If you're seeking a quiet, rural Icelandic experience and don't mind a bit of bureaucratic red tape, Egilsstadir could be a suitable choice. But those in search of urban sophistication would be wise to look elsewhere.