‘NYC will turn into Mumbai’: Billionaire warns after Mamdani’s victory. Here's why

Socialism has never worked historically, and with Mayor Zohran Mamdani’s socialist agenda and rent freeze plan, which will cripple the housing market, New York City will turn into Mumbai, warned billionaire investor Barry Sternlicht in an interview with CNBC. He said Mamdani’s plans are driving developers out of the city.

The Chairman and CEO of Starwood Capital Group said Mamdani’s plan to freeze rents because incomes have stagnated will trigger a chain reaction of non-payment.

"Over $100 million, every project in New York has to go union, and it’s super expensive. It leads to extremely expensive housing. And other developers have tried to cut deals with the unions, but they rule New York, and that’s one of the key reasons the blue states are so expensive and they’re so difficult to add supply of housing to," said the billionaire in an interview with CNBC Property Play.

"And then the far left gets really nuts and says the tenants don’t have to pay. Well, you can’t kick them out if they don’t pay. So the neighbour finds out the neighbor isn’t paying, and they don’t pay, and the next guy doesn’t pay, and then you’re basically going to turn New York City into Mumbai." Rising construction costs, powerful trade unions, and Mamdani’s rent freeze plan will make housing projects economically unfeasible.

He said New York City was in for a really tough time. "Maybe he’ll learn from history. Maybe the million people that voted for him won’t realise that socialism has never worked anywhere on the planet Earth, ever."

Sternlicht said New York’s affordability crisis comes from policies that discourage developers from building. He said Mamdani is not focusing on the core issues and that the city needs to increase housing. “You need serious subsidies from the government if they want us to work with unions,” he said.

Sternlicht did not support either Mamdani or his rival Andrew Cuomo during the campaign and said that his criticism isn’t political but practical.

NYC RENT FREEZE

New York City's real estate sector is bracing for major changes as Zohran Mamdani advances plans to freeze rents on rent-stabilised apartments. Industry leaders are closely monitoring how these proposals could reshape investment and maintenance in the city's affordable housing market. The Rent Guidelines Board, which determines rent adjustments, remains a focal point as Mamdani is set to influence its composition through mayoral appointments.

Mamdani's approach follows a brief period under former Mayor Bill de Blasio, where rent freezes were enacted, but later reversed by outgoing Mayor Eric Adams. The industry anticipates that the new administration may attempt to restore or expand such measures, with developers and property owners expressing apprehension regarding regulatory uncertainty and operational impacts.

Members of the real estate industry have voiced concerns that rent freezes on stabilised apartments could restrict owners' ability to fund repairs and modernisations. There are also worries that these policies may reduce incentives for investment in affordable housing projects, as potential returns could become less predictable under stricter regulations.

Kenny Burgos, CEO of the New York Apartment Association, which represents a majority of the city's affordable housing and property developers, highlighted significant doubts about the feasibility of a freeze.

The political shift comes after Mamdani’s election victory, propelled by high turnout among younger voters, newcomers, and renters who were motivated by promises to lower living costs in one of the world's most expensive cities. Although the mayor cannot unilaterally set rents, the power to appoint Rent Guidelines Board members and shape housing policy gives the new administration considerable influence over the city’s rental market.