Saudi Sovereign Wealth Fund Plans Majority Stake in $1 Billion NYC Skyscraper 

According to the Council on Tall Buildings and Urban Habitat, there are 47 buildings taller than 150 meters, or 492 feet, in all of Saudi Arabia. New York City has 319.

Now, the kingdom’s Public Investment Fund (PIF) has agreed to invest in maintaining that gap with plans to take a two-thirds stake in a 1,200-foot Manhattan skyscraper development. The deal is with NYC real estate developer Related, which initially planned to build a mixed-use residential project at the site but has more recently considered an office building to capitalize on the post-pandemic return to work in America’s largest economic metropolis.

An Apple Fit for a Kingdom

The pandemic turned the solid ground under many commercial real estate investments and developments into quicksand, but signs of a rebound led some to believe the alchemy would next change their foundation into gold. Last year, office building sales in the US rose 20% to $63.6 billion, according to MSCI. While well below the half-decade before the pandemic, when sales averaged $142.9 billion per year, it was the first increase since 2021.

However, the boom in access to cheaper cash for major deals that many investors expected through Fed cuts has yet to materialize, as the central bank has not reduced interest rates at all since last year. Economic uncertainty hasn’t helped. Last month, Spencer Levine, the president of NYC commercial real estate investor and developer RAL, told Business Insider: “We have definitely seen a slowdown in transactions.” At the same time, Jim Costello, MSCI’s director of research, flagged a handful of early warning signs for the commercial real estate sector, including a 52% year-over-year drop in deal volume for hotels in April, which he said could be seen as “a bit of a canary in the coal mine.” Enter the Saudi PIF. One of the world’s largest and most prominent investors, with roughly $925 billion in assets under management, it’s one of many foreign investors that have opted to pour cash into the New York City skyline, despite the uncertainty this year:

• As part of the PIF’s deal with Related, which was first reported by The Wall Street Journal, it has already invested some $200 million in the planned development at 625 Madison Avenue, a site just a block from Central Park that the two purchased for $600 million last year. The total cost of the development is expected to reach $1 billion.
• MSCI data show that foreign investors bought a total of $2.1 billion in commercial real estate in Manhattan during the fourth quarter of 2024 and the first quarter of 2025, or five times what they purchased in the same period spanning the end of 2022 and the beginning of 2023.

Come From Away: The PIF made a 2020 debt investment in Related that it can convert into a 15% equity stake. The company is best known as the co-developer of Hudson Yards, located between Manhattan’s Chelsea and Hell’s Kitchen neighborhoods, where it has another international partner: Canadian multinational real estate firm Oxford Properties. As it happens, MSCI warned in May that Canadian firms — which it dubbed the “most dominant” source of overseas capital in US commercial real estate with close to $200 billion in deals since 2015 — have become “increasingly negative” in their sentiment amid tariff uncertainty. But judging by the PIF, they may have overstated the “absence of overseas capital.”