Detroit, the Next Great Chinatown?

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Chinese investors snapping up cheap Detroit homes is an old story, so I’m surprised that there are still suckers out there who are throwing good money after bad:

Low property prices in Detroit, United States, have lured global investors, many of them Chinese, to the city keen to join the buying spree, housing agents said.

An agent in Beijing said about 1,000 people called a hotline to join a visit to Detroit last weekend after realizing they can buy a house there far cheaper than in Beiijing, the Beijing Morning Post reported on Tuesday. (China Daily)

Really only one reason why investors here are even looking at Detroit: you can actually buy housing for absurdly cheap prices, as low as a few thousand bucks. You’d think some of these stupid fucks poor suckers investors would wonder why these properties are practically being given away for free. Then again, what does some rich dude from Wenzhou know about crack houses?

Chinese investors simply should not be putting their money into any sort of investment overseas. The mentality of “Hey, it’s cheaper than Beijing housing” sounds idiotic, and it is. Beijing housing is ludicrously expensive, but at least it has a chance of going up. Detroit? Not as good of a bet.

I know that there is a dearth of good investment opportunities in China, but going overseas with your money is really not smart. Look at how many cross-border M&As end in failure, and those guys are supposed to know what they are doing. Yes, there are many reasons why those deals fail, but I think my basic point is valid.

What does your average Chinese investor know about Detroit? The U.S. housing market? Do they really think they can protect their “investments” from all the way over here? I bet most of them are using agents, who are screwing them over big time.

How is it that Chinese consumers can be so savvy when it comes to shopping for everyday products and yet so gullible when it comes to these investment schemes?

I should try to find a silver lining here. You know, the idea of a rich Chinese businessman actually travelling to Detroit to check up on his investments sounds like the beginning of a really shitty sitcom. And yet, I’d watch the hell out of it.

2 responses on “Detroit, the Next Great Chinatown?

  1. colin

    This is pretty crazy, but not unexpected. I would have thought the chinese investors be more cautious though. Reeks of MLM type hyping syndicates. Paying taxes and realizing financial loses might not faze some of these investors. Getting shot by drug squatters on your first visit to see the property is another thing…

  2. D

    I agree any investor should be wary about where they are buying. After all, real esttae is all about “Location, Location, Location”.

    But I disagree with any larger idea that foreigners buying property in the US now is a bad idea. Banks like HSBC are lending foreigners buying 2nd homes rates as low as 3%, so that type of good leverage on more expensive properties is a decent diversification strategy.