Why Billionaire Investor Warns New York Could Become the Next Mumbai Under Mayor Mamdani

Billionaire real estate investor Barry Sternlicht has sparked a debate with his comments on New York City's new mayor, Zohran Mamdani, and his policy to freeze rent for all stabilized apartments. Sternlicht, the Chairman and CEO of Starwood Capital Group, predicts that New York could face a housing crisis similar to Mumbai if this policy is implemented.

According to Sternlicht, the policy could trigger a chain reaction where one tenant stopping rent payments could lead to a widespread non-payment issue, similar to the situation in Mumbai. He emphasized that such a scenario would put significant stress on the housing market and could lead to a decline in property maintenance and investment.

Sternlicht, who owns both commercial and residential properties in New York, highlighted another significant challenge: the high cost of construction due to union labor requirements. In New York, any construction project over $100 million must employ union workers, making building extremely expensive. Developers have tried to negotiate with unions, but unions hold significant power. “... and that’s one of the key reasons the blue states are so expensive and they are so difficult to add supply of housing to,” Sternlicht said in an interview with CNBC Property Play, reacting to Mamdani's win.

He criticized far-left policies that protect tenants from eviction even if they do not pay. Sternlicht argued that such rules create a domino effect: one tenant stops paying, their neighbor does the same, and soon the system is under severe stress. This, he believes, could lead to a decline in the quality of life in New York City.

Sternlicht’s New York team is considering leaving the city due to these challenges. He stressed that the real solution is not rent freezes but increasing the housing supply. To make new housing economically viable, the government would need to provide serious subsidies, and unions would have to be more flexible on work rules and wages.

“People are working very hard. Leaders should focus on helping others succeed and keeping the American dream alive, rather than simply taxing successful people, forcing them to leave, and relying on federal aid to keep the city running,” Sternlicht said.

Zohran Mamdani, the new mayor of New York City, has promised to freeze rent for a certain kind of apartment throughout his full term. This means the Rent Guidelines Board would keep the rates the same. As mayor, Mamdani will have sole power to appoint the nine members of the Rent Guidelines Board, which sets the rates each year for rent-stabilized apartments. Several of the board members' terms are up, and Mamdani says he wants to replace them.

“Only appointing those who understand that landlords are doing just fine. Last March, the board found that landlord incomes rose by nearly twice the increase of their expenses. The median income for a rent-stabilized household is $60,000 a year. Any rent hike could push them out of this city,” Mamdani said in a video on his campaign website, adding, “For those landlords who need a little extra help, there's a city fund they can apply to.”

Despite the looming challenges, Sternlicht remains cautiously optimistic. He believes New York will survive, but the city may worsen before it improves. The debate continues as both sides present their arguments, and the future of New York's housing market remains uncertain.