New York Billionaire Warns: Rent Freeze Could Turn NYC Into Mumbai

New Delhi / New York: In India, salaried workers often complain that their incomes don’t keep pace with rising rents. A similar situation now appears to be unfolding in New York City, prompting concerns from real estate tycoon Barry Sternlicht, chairman and CEO of Starwood Capital Group. Sternlicht warned that if the city imposes rent freezes as proposed by the newly elected Indian-American Mayor Zohran Mamdani, New York could end up resembling Mumbai, one of India’s most densely populated and high-rent cities.

Rent Freeze Proposal and Its Implications
Mayor Mamdani has advocated for a freeze on rising rents, arguing that “if tenants’ incomes are not increasing, why should rents go up?” Sternlicht, whose portfolio includes both commercial and residential properties in New York, believes such measures could backfire. He warned in an interview with CNBC Property Play that if tenants realize their neighbors are not paying rent, a domino effect could lead to widespread non-payment, negatively impacting the city’s economy.

He noted, “In New York City, every project exceeding $100 million requires union involvement, which drives up costs. Other developers have attempted to negotiate with unions, but the city’s rules dominate. This is a major reason why housing in ‘blue states’—mostly Democratic-led—is so expensive, and why expanding housing supply is so challenging.”

Concerns Over Left-Wing Policies
Sternlicht criticized left-leaning policies that, according to him, give tenants the perception they can withhold rent without consequences. He said, “When one tenant sees another not paying rent, a chain reaction starts. Eventually, you could turn New York City into Mumbai.” He also mentioned that his New York team is considering relocating due to these policy uncertainties.

What Needs to Be Done
Sternlicht emphasized that focusing on rent control alone misses the bigger picture. “We need to increase housing supply. That’s not easy. If unions are involved, government subsidies are essential. Labor laws, wages, and regulations must be more flexible to make housing economically viable,” he said.

A Tough Road Ahead
While Sternlicht believes New York will survive, he warned of challenging times ahead. “People are working hard. The focus should be on helping others succeed and restoring faith in the American Dream, rather than taxing successful individuals excessively, forcing them out, and relying on federal aid to keep the city running,” he added.

As New York debates the balance between tenant protection and real estate investment, Sternlicht’s stark warning serves as a cautionary note on the potential economic consequences of rent freezes.