ED. Note: Foreigners are not allowed to purchase as many properties as they wish. … Foreigners buying property in China are required to have a Chinese name …
Manufacturing has been destroyed and shipped off to China, Mexico et al. Post depression, Detroit has been working to rebuild itself with Deflation of property being an excellent opportunity to create a new and better Motown! This effort has been blocked by the Federal and Local government tightening the noose of regulations, and compliance laws.
In other words, Detroit didn’t need this foreign cash influx…. But the Government enables the cause of the Chinese.
*Living in North Austin a few years back we witnessed a total change in the landscape. Chinese malls, and banks littered the main road, and homes were being snatched up at record speed by Chinese nationals. (One of the few areas in the USA where property is cheap and appreciating daily!) – Here in Atlanta the same game is running in N. Atlanta (Gwinnet Co.)
So why do we allow this in the US? Desperation, and corruption! It is also tough to get home loans if you are a middle class American without collateral. Banks are getting Quantitative easing (free money) at record setting pace. Remember all this when you buy more useless crap made in China! ~ JB
Forbes
Detroit, broke with almost no prospects for recovery, is the fourth most popular U.S. destination for Chinese real estate investors. In fact, it was bad news—the city’s July 18 bankruptcy filing—that triggered renewed interest. “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. Middle Kingdom, meet Motown.
Chinese shoppers can’t resist a bargain. Where else can you buy a two-story home in the U.S. for $39? 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, asked, “Seven-hundred thousand people, quiet, clean air, no pollution, democracy—what are you waiting for?”
Who says the Chinese are waiting? Dongdu International Group of Shanghai bought, sight unseen, two downtown icons, the David Stott building for $4.2 million and the Detroit Free Press building for $9.4 million, both at auction this September.
Moreover, 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.
The Chinese certainly have made an impact on the locals in Detroit. “I have people calling and saying, ‘I’m serious—I wanna buy 100, 200 properties,’ ” said Caroline Chen, a real estate broker in nearby Troy, Michigan, to Quartz.com. “They say ‘We don’t need to see them. Just pick the good ones.’ ” Chen reports that one of her colleagues sold 30 properties to a Chinese investor.
The Chinese are coming, but what are they doing? Dongdu International will make a big contribution to downtown by redeveloping the Detroit Free Press building, turning it into a retail and residential complex, but that ambitious plan appears to be the exception. China’s rich are investing in the Motor City like they invest in their own country, where they buy multiple units at a time. In China, like here, they often keep their acquisitions vacant, treating new properties like stores of value.
The Chinese buy-and-hold tactics in Detroit suggest patience, but that’s not the whole story. The bigger story is that the parking of wealth offshore indicates capital flight. The Chinese have only 13% of their wealth outside China, according to Oliver Williams of WealthInsight, while the global average is 20% to 30%, so some of transfers of wealth abroad are normal for a developing society.
But it’s not just money that is fleeing. A study conducted by Bank of China and Hurun found that more than half of China’s millionaires have taken steps to emigrate or are considering doing so. This statistic tells us the transfers of cash out of China are not just normal diversification.
There is substantial disagreement as to how much Chinese individuals have already stashed offshore. Boston Consulting Group estimates they hold $450 billion in assets outside their country, and WealthInsight believes the number to be $658 billion.
Yet everyone agrees that the figure, whatever it is, will go up fast. Boston Consulting, for instance, predicts offshore assets will double in three years. CNBC late last month called the movement of Chinese capital “one of the largest and most rapid wealth migrations of our time: hundreds of billions of dollars, and waves of millionaires flowing out of China to overseas destinations.”
So the Chinese buying up Detroit says less about the prospects of Motown than what they think of their own country. It’s not like the Motor City is a good place to invest. It has what is surely the worst housing market in the U.S. “I’ve been in the Detroit area for 35 years,” says Chen, the broker from Troy. “Thirty-five years ago downtown Detroit was like this, and it’s not getting better.”
She’s right. After all, who can love a city where the most powerful figure is a bankruptcy judge, the state has had to take over the local government, and creditors are about to cart off the art museum?
But as grim as the future is for Motown, it is evidently better than China’s, at least according to many Chinese. They are pouring their cash into Detroit.