Xcode cannot download iOS 10 simulator due to network connection issue
Finally found a solution, thanks to this forum post!

The solution is to run Xcode in sudo mode, like so:

sudo /Applications/Xcode.app/Contents/MacOS/Xcode


This really ought to be fixed, it is not an acceptable normal user flow to require the Xcode app to be run from the terminal in order to workaround this error.