The largest Chinatown in the U.S. may soon be Detroit. Not an area within the city, but the city itself. Chinese investors are investing heavily in the bankrupt city, so much so that it now ranks fourth among all U.S. cities for Chinese property hunters online. A Chinese international property portal, Juwai.com, ranked the top US cities; Detroit was fourth, behind New York, Los Angeles, and Philadelphia.
Prices for family homes in Detroit have plunged to $10,000, prompting a Chinese TV station to air a report asserting that Detroit homes cost as much as a pair of shoes. One Weibo-user posted, “700,000 people, quiet, clean air, no pollution, democracy — what are you waiting for?” That post triggered millions of responses.
Heavy hitters are already buying some of Detroit’s most famous commercial buildings. Dongdu International Group of Shanghai (DDI) spent $13.6 million in September 2013 for three of them, including the Detroit Free Press building. The company stated on its website: “Detroit is similar to Shanghai in that it has many classical and iconic buildings. DDI through its successful history has had great experience in bringing these types of buildings back to life and so the company is bringing and using its China experience to the fore in Detroit.” The site spoke of famous buildings it had acquired, including the Detroit Free Press Building, the David Stott building and the Clark Lofts buildings in central Detroit.
Wang Ning, deputy manager in charge of international business at China online real estate agency, exhorted investors: “There are factories, commercial real estate and upscale areas around Detroit with proximity to good schools that are worth investing in.” SouFun claimed that the week after Detroit declared bankruptcy in July 2013, there were over 1,000 telephone inquiries regarding buying property in the city.
Detroit is attempting to bounce back; in early November, a court ruled that the city could restructure its $18 billion debt. Living increases will be reduced for police and fire department retirees and general pensioners’ will get 4.5% less, no more cost of living increase, and reduced annuity payments. Health care benefits will be reduced.
They are not the only ones taking a hit; creditors who hold “general obligation” bonds will receive only 34 to 74 cents on the dollar, and two major bond insurers are going to have to settle for 14 cents on the dollar in cash, with some property development rights.
Meanwhile, Michigan Gov. Rick Snyder traveled to China on Wednesday for the fourth time since 2011. He said, “Detroit’s coming back. We’re emerging from the bankruptcy. A lot of things are going on in terms of investments.” Snyder has pushed for 50,000 special federal immigration visas over the next five years to grease the way for Chinese professionals to move to the city. Barack Obama threw his support in the same direction as Snyder recently, extending new Chinese student visas to five years and business and tourist visas to 10 years.