Zohran Mamdani’s candidacy for New York City mayor could have fallout on the city’s real estate market if he prevails in this fall’s election and is able to implement his socialist policies.
Mamdani’s campaign has called for raising taxes on corporations, along with the city’s wealthiest residents who earn more than $1 million annually. He has also called for implementing free childcare, creating city-owned grocery stores and raising the minimum wage to $30 an hour by 2030.
His platform also includes policies related to real estate, calling for the construction of 200,000 new units of “permanently affordable, union-built, rent-stabilized homes” in a decade while immediately freezing rents for all rent-stabilized tenants.
Those policy proposals have raised concerns about their collective impact on New York City’s business climate and real estate sector if Mamdani were to win the mayoral race. Pierre Debbas, managing partner at Romer Debbas, a law firm that specializes in residential and commercial real estate, told FOX Business in an interview that investors are already reassessing the city’s market following Mamdani’s primary win.
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Debbas said that the New York City real estate market had the hottest start to the year since 2021, though he noted that it had “slowed down significantly” in recent weeks and said it wasn’t clear whether it was due to seasonality or “due to the uncertainty of the upcoming election for mayor.”
“I think most of us in the real estate world were pretty shocked to see a progressive socialist gain as much traction as he’s gotten this far,” he said.
“My gut feeling is that consumers are taking a step back and wait and see how this plays out, because if a socialist is elected mayor of New York City, I don’t think it’s going to be good for the long-term health of our local economy and the real estate industry.”
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Debbas said New York City has seen individuals and businesses depart the city in the years since the pandemic in search of friendlier business climates with lower taxes, a dynamic that could pick up steam again if Mamdani wins the mayoral election.
“When you have an anti-business, socialist agenda, you’re trying to redistribute wealth and tax your highest-income earners, you know, what we’ve learned in the last five years is that you’re not tied to New York City. You don’t have to be here. You’re really here more so because you want to,” Debbas said.
“Pre-pandemic, you had to be here, right? You had to be by Wall Street, you had to be by the mega banks, you had to be by where the corporations are, and they were all based here. Now, the companies are showing you that they can be elsewhere and the workforce is only going to follow,” he explained.
“It’s certainly an alarming aspect for the future of New York City if you have an exodus of people, and if you have a socialist regime, I think you will have an exodus of people.”
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Debbas said that with elevated levels of inflation and high interest rates in the last five years, city regulations that already constrain rent increases mean that rents “aren’t even keeping up with the operational expenses of a building.”
He added that Mamdani’s rent freeze proposal would create distress in the real estate markets, which he said is a “form of communism” that would set the stage for the government to take over distressed properties.
“You’re forcing distress to take place, because if you’re not allowing landlords to even increase rents in conjunction with the increased operational cost, distress is inevitable, a foreclosure will take place,” Debbas said. “He wants to be primed in that situation to create this headache in the marketplace, create this distress, and have the government set up to acquire these properties to create community housing.”
“There is no room in this city – the financial capital of the world, the market is built on the hardest-working, most talented people on the face of the planet – to be run by a communist, and you’re going to subject the real estate market, which is the backbone of New York’s economy, to taking by the government,” he explained, adding it’s “absolutely catastrophic.”
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