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By Glynna Prentice, International Living,

I’m sitting in the plaza mayor with friends, sipping a chilled beer and nibbling jamón serrano—slices of cured ham similar to prosciutto. It’s 7.00 p.m. on a warm evening and the shadows are lengthening. The sun won’t set until nearly 10.00 p.m. That gives me plenty of time to stroll the cobbled streets, take a hike in the hills near town…or just sit here in the plaza watching the world go by.

I’m in Cuenca, a provincial capital less than an hour by train from Madrid. For budding expats who dream of living in Spain, provincial cities like Cuenca are a great option. Easily a dozen sit within 90 minutes of Madrid. And in them you can enjoy a relaxed, inexpensive lifestyle in a scenic setting. When you want the bright lights and big city, just catch the train or bus to Madrid and spend the day in one of Europe’s most exciting capitals.

Cuenca lies east of Madrid in the vast region known as Castilla-La Mancha. Founded by the Arabs, this city of 56,000 boasts a dramatic setting. The old city lies on the spur of a hill surrounded on three sides by gorges that drop hundreds of feet to the valley floor. The cream- and dun-colored buildings—the same stone as the gorge walls—seem to grow right from the rock. So steep is the city that some medieval houses, which cling to the cliff sides, are up to 13 stories high. They have one entrance on one street and a second entrance on a lower street, perhaps 100 feet below.

I’ve visited Cuenca off and on for over 20 years and lived here for a while in the 1990s. For decades—including the years I lived here—Cuenca was an international artists’ Mecca. About 15 years ago, though, Cuenca set its sights on the tourism industry. The authorities built a performing arts center and several museums. They repaired the medieval streets of the old city and offered incentives to home owners to renovate their crumbling homes.

Today the city looks clean, well renovated, and appealing. Professionals from Madrid are starting to buy homes in Cuenca for weekend escapes and vacations. A modern highway makes the driving time less than two hours. And just last December, a high-speed train was inaugurated, putting Cuenca just 50 minutes from the capital.

The city has always been popular with nature lovers. And no wonder… From where I sit in the plaza mayor, I’m just a few minutes’ walk—through a medieval archway and down a cobbled stone staircase—to the tranquil, poplar-lined Júcar River.

I go here almost every day, joining the locals. In the long, late afternoons, women walk their dogs on the sandy path beside the Júcar, while their husbands line the riverbank, leisurely casting for trout. Their teenage children whiz past on mountain bikes, heading into the hills, or swim off the fresh-water “beach” at the riverside sports club. (A day’s pass costs less than $6.)

For shopping, you can wander the stalls of the traditional market or go to several modern supermarkets. Fresh local fruit, vegetables, and bread cost no more than you’d pay in the U.S., and often less. Meat is pricier—but offerings include mouth-watering local specialties like boar, venison, quail, and Spain’s famous cured hams. Spanish staples like olive oil and wine are cheap—a liter of good olive oil costs about $3 and a bottle of decent wine about the same amount.

I’ve even found very quaffable, five-liter wine boxes that worked out to about $1.40 a liter. And the menú del día in many restaurants around town runs from about $14 for a two-course lunch with wine up to $21 for three courses at Los Arcos, my personal favorite.

Food and drink is notably cheap here, but perhaps more surprising is that property is too…