Chinese purchases of two downtown Detroit office towers recently could be followed by more local investments, property brokers suggest in Crain's.
"Chinese investors are looking at what I'd call term 'value-based deals,' " international investment specialist Lou Longo tells reporter Dustin Walsh, adding that historic buildings are of particular interest.
"They got the buildings at an auction for a bargain price, and I don't see them looking at this as a 40-year hold. I think their local strategy is to get quicker returns on their invested capital that they are seeing in China."
"While the bankruptcy is viewed as a bad thing elsewhere, it raised the exposure level of Detroit's real estate market in China," a local specialist says.
Longo is head of international business consulting services at Plante Moran PLLC in Chicago. He and others predict that more Chinese deals "as metro Detroit continues its economic rebound," Walsh writes.
Crain's first reported last week that September's auction sale of the David Stott and former Detroit Free Press buildings was won by Chinese real estate developer DDI Group.
The Shanghai-based company, also called the Dongdu International Group, acquired the two downtown Detroit buildings, sight unseen, for $4.2 million and $9.4 million, respectively, outbidding Detroit-based Rock Ventures LLC, said Ryan Snoek, a real estate consultant who coordinated the sale.
Detroit's bankruptcy raises interest in the city among Chinese investors, local attorney Evonne Xu tells Crain's.
"They want to invest in a low market and resell when the market comes back," Xu said. "While the bankruptcy is viewed as a bad thing elsewhere, it raised the exposure level of Detroit's real estate market in China."
Xu was hired in 2012 to lead Chinese transactions for Howard & Howard, a Royal Oak law firm. There's strong interest interest among Chinese business owners in investing in Southeast Michigan golf courses, she tells Walsh.
He also hears optimism from Milan Stevanovich, manager of business and community relations at the Detroit Chinese Business Association:
"We're going to see another 100 Chinese companies investing in Detroit over the next five years."
The association hosted a real estate meeting last month at the Madison Building in Detroit with a delegation from several provinces in China.
Stevanovich said a group of Chinese government officials and investors is particularly interested in a riverfront development concept. The idea would be to create a marina, resort and yacht building development in metro Detroit. Ten delegates from Hainan and Nantong provinces, Chinese business leaders and Miami-based yacht builder Paracas Yachts have been in contact about the potential project, Stevanovich said.
The group is hoping to create the marina on the Detroit riverfront or along the 34 miles of waterfront on Lake St. Clair in Macomb County.
