The monarch - who is currently in the US city recovering from a back operation - is said to be considering buying St Vincent's Medical Center which he will turn into an Islamic cultural site.
The news comes after developer Sharif el-Gamel hit the headlines with a plan to build a $100million mosque at the site of the World Trade Center which sparked protests from some Americans who said it insults the victims of the 9/11 attacks.
Lawyer Dudley Gaffin claims the 87-year-old king is now considering buying the former St Vincent's hospital for $300million from its owners, the Sisters of Charity, in a bid to save the medical facility and build a mosque on the site.
He is already said to be in talks with New York officials but it is not clear if he has approached Mayor of New York Michael Bloomberg with the proposal.
Speaking about Mr Gaffin, one community leader, who did not want to be identified, told the New York Post: "He's asking what it would take to put in a bid.
"He says the king wants to do this as a PR move - to save the hospital and move the mosque away from the World Trade Center site.
"He wants to show that Muslims can do good works."
The king is currently recuperating in the city's Presbyterian Hospital after two operations to remove a blood clot from his spine and fix a slipped disc in his back.
After arriving in New York for urgent medical treatment on December 3 it is not known how long he has been advised to stay.
