Downtown Detroit is home to one of the worst housing markets in the country, as prices of homes have collapsed and foreclosures have soared in the city’s depressed economy.
But some Chinese investors hungry for real estate are hoping Detroit’s losses will be their gain. After Detroit filed for bankruptcy July 18, Motor City property has been a hot topic on China’s social media platform, Weibo, according to a Quartz.com report.
News of the bankruptcy, coupled with a Chinese TV report in March that claimed you could buy two houses in Detroit for the same price as a pair of leather shoes, has piqued investors' interest.
Quartz spoke to Caroline Chen, a real estate broker based in Troy, Mich., who says she has received “tons of calls” from mainland Chinese expressing serious interest in the market.
“I have people calling and saying, ‘I’m serious -- I wanna buy 100, 200 properties,’” Chen said. She added that a colleague had recently sold 30 properties to a single Chinese buyer.
Chinese housing is among the most expensive in the world. Capital controls also make investing big sums in overseas stocks or property a challenge.
Buyers seem to be purchasing purely as investment, and don’t plan on moving to Detroit anytime soon. Though Chinese realtors had planned tours of the city in late spring, many were canceled when investors didn’t receive visas, according to Chen.
Since there are no plans to live in the homes, shopping remotely from China is not a problem. “They say, ‘We don’t need to see them [the properties], just pick the good ones,’” Chen said.
This may be only the beginning of a buying trend. Wei Kefei, an organizer of a Beijing property fair, told state-run Global Times that Chinese were investing now and expecting Detroit's economy to come back, helped by the city’s auto industry. “Some people did rush to buy houses in Detroit, betting on the U.S. economic recovery, which they believe will boost development in the auto industry,” Wei told Quartz.
The buying craze was so significant that China’s Ministry of Foreign Affairs warned citizens about the risks of investing, and the many hidden costs that buyers take on when they purchase U.S. real estate.
Chen doesn’t seem as convinced as the Chinese of the Motor City’s recovery. She compared the chances of the city’s housing market turning a profit to winning the lottery. “Thirty-five years ago downtown Detroit was like this and it’s not getting better.”