Chinese investors eye bankrupt house market in Detroit
Two days after a Chinese real estate agency, whose location was not disclosed, advertised an investors' tour in Detroit, thousands of people have expressed interest, according to a report in the People's Daily.
The same agency is advertising a tour to the US east coast in April, which costs 25,000 yuan and will take investors to Washington DC, Boston and New York City.
Apparently Detroit's plummeting home prices have become attractive to Chinese investors who have seen a hike in housing prices at home, according to a report by CCTV.
The report recounted Detroit’s fall from US automotive industry hub to “ghost town” due to a decline in industrial output and poor management.
The CCTV report featured a real estate developer in Detroit who acquired 363 properties in two years. Most cost only a few thousand US dollars, while smaller properties can cost as little as US$500.
While Detroit bargain properties are in demand with overseas investors, experts warn that there might be hidden costs associated with foreclosure.
There are costs associated with city inspection, property taxes and other maintenance fees. Such homes also require major reconstruction before they can be rented out, according to experts.
Reports in the Chinese media caught the attention of Chinese netizens. Some are sceptical about the low price levels.
“This is a bit contrary to common sense… better be alert to the media’s motivation in reporting this.” one said.
“You can’t even buy half a square metre in China with US$500,” wrote another.
A third suggested, “Detroit’s economy can be revived with a 20 per cent property tax.”
Detroit has a high crime rate, high population loss and widespread poverty. The city was subject to an emergency state takeover of its finances in March this year.