New York braces for billionaire exodus after socialist Zohran Mamdani's win

Yahoo

a day ago

New York is bracing for an 'exodus of billionaires' after the Democrats nominated a staunch socialist as their candidate for mayor.
Zorham Mamdani, a 33-year-old 'anti-Zionist', sent shock waves through American politics on Tuesday when he beat Andrew Cuomo, the former governor, in the Democratic primary, earning him the party's nomination for November's mayoral election.
A rank outsider, Mr Mamdani was carried to victory by a wave of young voters who were won over by his radical campaign pledges to freeze rents and introduce free public transport and city-run grocery stores, all of which he pledged would be paid for by hiking taxes on the wealthy.
The primary result has sparked panic among New York's ultra-rich, with luxury real estate agents inundated with calls from clients looking to relocate or freeze plans to move their businesses to Manhattan.
One high-end broker described Mr Mamdani's victory as the 'worst thing for the housing market since 9/11', while another called it the 'nail in the coffin' for New York.
'There's an old saying in real estate: Money goes where it's welcome,' said John Boyd Jr, founder of Florida-based corporate site selection specialist The Boyd Co, who works with a range of multi-millionaire New York-based clients.
'There's alarms going off among many key executives as well as the billionaire class about New York becoming a socialist run city,' he said.
Eric Benaim, a leading real estate broker known as 'The King of Queens', said that his phone has been 'blowing up' with clients panicking about the impact of Mr Mamdani's policies.
'One person just liquidated everything. He was just about to make another investment in New York city but he's now going to look elsewhere,' said Mr Benaim, the founder of Modern Spaces.
'It's the most devastating thing (to our industry) since 9/11,' he added. 'We are going to have the biggest exodus of New Yorkers since Covid - except this time, they're not going to come back. That's going to change New York.'
Mr Mamdani plans to hike the corporate tax rate from 7.25 per cent to 11 per cent and to charge those earning over $1 million a year an additional two per cent in city income tax, which is expected to cost wealthy households an additional $118,000 a year.
Business executives say the proposals have triggered widespread dismay, with Kathryn Wylde, the CEO of the partnership for New York City, which represents top business leaders, warning that 'terror' is being felt by many New Yorkers.
Briggs Elwell, the CEO and co-founder of RLTYco, a real estate consultant in New York, told The Telegraph it was 'a time of unique uncertainty'.
While James Whelan, president of the real estate board of New York, described Mr Mamdani's proposals on how to cut crime, build houses and create jobs as 'fanciful and extreme'.
Many of the city's ultra-wealthy have thrown their weight behind the more business-friendly incumbent Eric Adams, who launched his re-election campaign as an independent on Thursday with a rousing speech in which he declared: 'This is not a city of handouts.'
Mr Adams won as a Democrat in his first mayoral bid in 2021, but announced he would run an independent after he saw his popularity plummet following his indictment on corruption charges, which he denied.
The case was later dropped by the Trump administration.
Late on Wednesday, Mr Adams courted Wall Street sharks and politicos in a Manhattan conference room where they plotted how to block the rise of Mr Mamdani, according to The New York Times.
As New York's top one per cent look to leave the city, low-tax states such as Florida, which does not levy income tax, are set to become 'big winners', with Mr Benaim claiming property agents are 'rubbing their hands' at the prospect of wealthy buyers flooding into the state.
Mr Boyd said that he has been inundated with enquiries in recent weeks from business executives looking to move full-time to South Florida, which he called 'the sixth borough of Manhattan'.
Republicans have been quick to cash in on the so-called 'Mamdani effect', with Jack Ciattarelli, a New Jersey gubernatorial candidate, inviting business owners to move to the state.
'To all the residents and business owners of New York City who don't want a socialist, defund the police, anti-Semitic mayor representing them, I encourage you to move to New Jersey,' Mr Ciattarelli wrote on X.
Even members of Mr Mamdani's own party have sought to distance themselves from him, with John Fetterman, the centrist Democratic senator, describing the state assembly member's nomination as 'Christmas in July for the GOP'.
Kathy Hochul, the New York Governor, also refused to endorse Mr Mamdani's tax rises in the lead up to the primary, telling reporters: 'I don't want to lose any more people to Palm Beach.'
It is not only Mr Mamdani's fiscal policy that has generated consternation among New York's business leaders. A self-described 'anti-Zionist', the mayoral candidate is a staunch Palestinian supporter and incensed members of the Jewish community by refusing to condemn the phrase 'globalise the intifada'.
In a city with the biggest Jewish population outside of Israel, this is a major problem, according to Greg Kraut, the CEO of KPG funds, the largest office developer in New York.
'I've probably had about 30 phone calls from clients who are very nervous,' he said. 'Any time there is a headline that says 'anti-Semite socialist wins Democratic party election', that's not good for business, is it?'
Experts also fear that Mr Mamdani's plans to pay for free public transport and universal free childcare with tax rises on the wealthy are unrealistic.
'If you are making a million or more in New York City, going from four per cent to six per cent in income tax is a 50 per cent tax increase - it's substantial,' said Nicole Gelnas, a senior fellow focused on Urban Economics at the Manhattan Institute.
According to the city's independent budget office, one per cent of households pay 40 per cent of city income taxes, with non-resident tax payers making up the fastest growing group of New York taxpayers.
'It doesn't take many of them to say, 'I can spend eight months a year in Florida and come back here whenever and save myself a lot of money,' to change the tax base,' Ms Gelnas added.
Luxury real estate dealers fear Mr Mamdani's support for de-funding the police and abolishing prisons will drive down property prices. He has also endorsed decriminalising prostitution and pledged to block US Immigration and Customs Enforcement agents' efforts to deport undocumented migrants.
The last democratic socialist elected mayor of New York was David Dinkins, whose three-year term in office from 1990 was marked by racial discord, a drug epidemic, high levels of homelessness and a soaring murder rate.
'Crime was through the roof, businesses were fleeing and public services weren't being met,' recalled Mr Kraut, warning that the election of Mr Mamdani could herald a return to those dark days.
'People have called me up from Chicago saying: 'You guys are up next,'' he cautioned.
Mr Mamdani romped to victory thanks in part to a tidal wave of support from young voters, enamoured with his progressive agenda and slick social media campaign.
However, real estate agents warned that wealthy liberal voters' preoccupation with radical left-wing politics is naive.
'Everyone's a liberal until they lose their limo,' said Mr Kraut. 'If those companies and ultra net worth individuals choose to leave the city, your tax base goes bye bye.'
Reflecting on the long-term effects on America's wealthiest city, he added: 'New York always survives, but it's just another nail in the coffin.'
Mr Boyd warned that the primary result could spook investors in the long-term, potentially sending the city into a downward spiral.
He said: 'There's a very significant concern among job creators, investors and the real estate industry that New York is now always one election cycle from being a socialist-run city.'
Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.