Over the past couple decades Detroit has become the poster child for gross government overspending, struggling businesses, bailouts and blighted neighbors. Last July the city filed for bankruptcy.
Just when you’re about to write it off hope enters from stage left. Give a great welcome to the new Chinese real estate investor. Detroit is now their fourth most popular U.S. real estate investment market.
Forbes reports that “‘While the bankruptcy is viewed as a bad thing elsewhere, it raised the exposure level of Detroit’s real estate market in China,’ says Evonne Xu, a Michigan attorney catering to Chinese purchasers.”
It appears that even Chinese investors can’t resist buys like a two-story home for $39. Forbs detailed that China Central Television, the state broadcaster, in March reported that two houses in Detroit cost the same as a pair of leather shoes. No wonder a poster on Sina Weibo, the Twitter-like service, pitched, “Seven-hundred thousand people, quiet, clean air, no pollution, democracy — what are you waiting for?”
The interest in Detroit real estate extends to the commercial market where Dongdu International Group of Shanghai bought, sight unseen, two downtown icons, the David Stott building for $4.2M and the Detroit Free Press building for $9.4M, both at auction this September.
According to Forbes “…Chinese purchasers are making bulk purchases of inexpensive properties — those selling for $25,000 or less — in the rings surrounding the city center. ‘They’re banking on the downtown resurgence spiraling out into those rings,’ explains Kelly Sweeney of Coldwell Banker Weir Manuel. Mainland parties often buy at tax and foreclosure sales, hold their property and patiently wait for appreciation.”
There are immediate gains for downtown Detroit as Dongdu International will make a big contribution to downtown by redeveloping the Detroit Free Press building, turning it into a retail and residential complex. The Chinese buy-and-hold tactics in Detroit suggest serious patience.