Wealthy residents and finance workers who had been living in Dubai are flocking to small Swiss cities in search of a safe haven amid the fallout from the Middle East war.
On the 12th, the Financial Times (FT) in the United Kingdom reported that Zug, a Swiss city of 135,000 people, is rapidly emerging as a new escape valve for Middle Eastern asset holders. As geopolitical tensions surrounding Iran intensify, demand has surged among the wealthy who prioritize personal safety and asset protection. Zug has long been known as "Crypto Valley," thanks to its low corporate taxes and sweeping regulatory easing.
Heinz Tännler, finance director of the canton of Zug, said, "Since the outbreak of the Iran war, inquiries from asset holders and family offices have been pouring in," adding, "While the situation itself is regrettable, it is a reality that our canton is benefiting as a side effect."
On the ground, the heat is turning feverish. According to the FT, one bank in Zug has received four times as many résumés from former employees of U.S. banks since the war. A private banker (PB) said, "Dozens of people crowded an open house for a two-bedroom rental, and the line wrapped around the block," adding, "The person standing behind me was an asset holder who had flown in from Dubai that morning."
But there is a high bar to moving to Switzerland. The biggest hurdle is a chronic housing shortage. Zug has such an extreme lack of rentals that listings are snapped up in just a few days. For non-European Union (EU) nationals, it is also a barrier that they must meet strict conditions such as having an employment contract or establishing a corporation to obtain a residence permit. Ultra-high-net-worth asset holders can use the lump-sum taxation system, which levies taxes based on living expenses, but this also requires prior approval.
Given the situation, some areas are enjoying a "trickle-down effect." Asset holders pushed out of Zug are turning their attention to Lugano, a southern, Italian-speaking city. Lugano is seen as having relatively more room in the supply of dwellings, and negotiations for lump-sum taxation based on living expenses are considered easier.
A local real estate source said, "Dubai residents of Italian, French and British nationality are preparing to move en masse," adding, "This is only the beginning, and the migration wave will intensify depending on the Middle East situation."