Why does Zurich have the ‘world’s highest risk’ of a real estate bubble?

The ‘real estate’ or ‘housing bubble’ refers, in simple terms, to a market cycle where property prices rise rapidly to unsustainable levels, often driven by high demand.

According to the newly released Global Real Estate Bubble Index 2026, compiled by UBS bank, that risk – when compared to 22 other major cities – is highest in Zurich. 

It is ahead of other notorious bubble-prone metropolises like Tokyo, Miami, and Dubai – in the 2nd, 3rd, and 4th places, respectively.

Why is that?

The influx of international skilled workers to Zurich has driven what the UBS refers to as “the sharpest rise in residential property prices.”

The city’s strong competitiveness and sustained demand for international talent, particularly in the fields of technology and artificial intelligence, have boosted housing demand.

In fact, over the past 20 years, Zurich has seen the largest increase in house prices among the cities covered by the UBS Index.

At the same time, the market “remained exceptionally tight, with vacancy rates close to zero and the supply of owned housing well below historical levels,” the study found.

This confluence of factors means that the bubble risk remains high.

Geneva as well

Geneva is another Swiss city included in the Index’s top-10 bubble risks.

In the 6th place, its situation – from the property prices and availability/shortages perspective – is similar to Zurich’s.

Living in a bubble

What would happen if the bubble…bursts?

Despite risks, that hasn’t happened in Zurich, or anywhere else in Switzerland, for that matter, since the 1990s.

But if this worst-case scenario were to occur, property prices would fall sharply, resulting in an oversupply of housing.

This may sound like a good idea – lots of cheap real estate around – but it really isn’t, because property owners would be left with houses that are worth much less than they owe to the bank for it.

A situation like this can trigger a severe economic downturn.