• Friday, October 09, 2015

Offers of US$1 houses in Detroit lure naive Chinese buyers

Staff Reporter 2013-03-22 09:20 (GMT+8)
Two happy owners pose with their two-story house in Detroit, purchased for US$700 in September 2009. (Photo/CFP)

Two happy owners pose with their two-story house in Detroit, purchased for US$700 in September 2009. (Photo/CFP)

China's internet users are debating whether they should relocate to the United States after seeing news of houses selling for as little as US$1 in Detroit.

Last weekend, around 1,000 people called a hotline to join a tour to Detroit following reports that dozens of properties in the struggling city are selling for under US$100, according to a Beijing real estate agent. Another agency said it would be soon launching its first 10-day tour to check out properties in New York, Boston and Washington at a cost of 25,000 yuan (US$4,000) per person.

China's escalating real estate prices in major cities have made it virtually impossible for many ordinary residents to own their own home, prompting them to check out prospects overseas. In one such report, the boss of a real estate investment company in Detroit said she recently spent US$2,300 to acquire a 200-square meter house in one of the city's ghettos that cost US$450,000 five years ago.

The property investor told China's state broadcaster CCTV that she has purchased 363 properties over the last two years, with the most expensive costing just US$12,000. Most of the smaller properties only cost US$500, less than a pair of high-end leather shoes, she noted.

With rising long-term unemployment rates and teetering on the verge of bankruptcy, Detroit was named by Forbes magazine as America's most dangerous city last year, with its population falling by more than 50% from its peak. Most of the properties on sale in the city have been abandoned or repossessed by banks, who are eager to get rid of them at just about any price to avoid maintenance costs.

The lure of cheap housing has seemingly overshadowed all other concerns for many Chinese netizens, who have sparked a furious debate on the country's popular microblogs with posts such as "one pair of leather shoes buys two apartments" and "one-square meter in Beijing equals a two-story house in Detroit." There are currently more than 1.2 million posts on the CCTV report alone on China's Twitter-like Sina Weibo.

Not all netizens, however, have been enthusiastic about buying real estate in Detroit, with some reminding potential investors of the difficulty of renting or reselling properties in the area.

A Detroit real estate manager told the Huffington Post that most of the Chinese and Asian investors contacting him on a daily basis have no idea about the complexities of the property market in Detroit, noting that most of the empty houses have been stripped bare by burglars and vandals.

A Georgetown University professor warned investors to think twice due to high property taxes based on subjective valuations by the government. Even if you buy a property for US$500, the government might value it at US$300,000 and tax you US$6,000 a year, the professor said, adding that the costs of renovations and maintenance could make the investment highly unattractive.

Meanwhile, property prices are also said to be dropping across the Atlantic, with a super-mansion in London cutting its sale price by £35 million (US$53 million).

Originally priced at £100 million (US$151 million), the three-story mansion known as Heath Hall is now selling for just £65 million (US$98 million) after failing to attract serious interest for more than a year.

The part of the story that most Chinese netizens have latched on to, however, is not the falling price of "Britain's most expensive home," but that the 2.5-acre property once belonged to the state-owned Bank of China in the 1950s.

News that the newly renovated 14-bedroom luxury pad — equipped with a home cinema, indoor pool, gym, steam room and sauna, tennis court and wine cellar — was once used to house bank managers and staff, have attracted widespread condemnation on China's microblogs, with many netizens ridiculing the opulent lifestyles of state-owned enterprise officials abroad.

"I had no idea employees of state-owned enterprises lived like royals overseas!" one netizen mocked.

Who`s who »
Qin Yizhi (秦宜智)

Qin Yizhi has been the first secretary of the Secretariat of Communist Youth League of China Central Committee since March 2013 A native of Xinxiang in Henan province, he was born in 1965 and ...