Zurich has topped the sixth annual Smart City Index from the International Institute for Management Development, which highlighted the supply of affordable housing as the biggest concern of city dwellers worldwide
The 2025 edition of the Smart City Index warned that the ability to find affordable homes is declining across the globe and prosperity is not being shared inclusively. This is greatly impacting on the overall quality of life for a wide cross-section of the urban population.
Trade war threatens smart city development
The study, compiled by the IMD’s World Competitiveness Center, warns that higher tariffs on steel and potentially lumber, part of the aggressive trade stance being adopted by the United States, are expected to increase development costs, putting further stress on an already constrained housing supply.
Direct participants in the trade war will likely experience economic losses that could outweigh any benefits, it adds. Consequently, rising inflation could damage industries heavily reliant on imported materials – construction being one.
“While cities are engines of economic growth and attract significant talent, this very success often drives up living costs,” said WCC director Arturo Bris.
“We observe a persistent gap between wage growth for many urban dwellers and the escalating price of housing, whether renting or buying.”
Factors like gentrification in diverse neighborhoods, a lack of affordable units being constructed, and speculative investment patterns are major factors behind the trend, the report finds. It also underlines that the crisis is more keenly felt in urban areas largely due to growing immigration influxes.
Minimal movement among top 20 smart cities
Zurich, Switzerland retained its top spot in the Smart City Index, followed by Norwegian capital Oslo and Geneva, which moved from sixth place last year to third.
Dubai (12th in 2024) and Abu Dhabi (10th in 2024) both entered the top five at fourth and fifth respectively.
Otherwise, there “minimal shifts” in the top 20 cities. Notably, Tapei City dropped from 16th last year to 23rd in 2025, while Slovenia’s capital, Ljubljana, jumped from 32nd to 16th.
The report assessed six new cities this year: AlUla in Saudi Arabia, Astana in Kazakhstan, Caracas in Venezuela, Kuwait City in Kuwait, Manama in Bahrain and San Juan in Puerto Rico, bringing the total to 146.
The WCC defines a Smart City as one that strikes a good balance between its economic prowess (eg jobs and housing), applied technology, environmental concerns and inclusiveness to facilitate its citizens’ quality of life.
The index is derived from 39 survey responses collected from residents representing various levels of society.
A unique feature of IMD’s report is that it avoids comparing two cities at very different stages of development; survey responses are rescaled according to how they rank in the Global Data Lab’s Subnational Human Development Index (SHDI).
