Research Show Detroit as Investment Hotspot

 

The Michigan city is fast becoming a top choice for foreign real estate buyers, as US president Barack Obama declares he loves the place and the US government pours millions into its car industry.

According to a market commentator, it is displaying classic signs of being ripe for investment for buy to let investors in particular.

'The US housing market, in general, remains ideal for investment opportunities. House prices are still low due to foreclosures and rental demand is high. Now, as Detroit enjoys an economic recovery, investors can benefit from Government subsidised rents, capital growth over time and re-selling back into the local market," it was explained.

Interest doesn"t just come from the more traditional investors in Canada and the UK, investors from Saudi Arabia and Singapore are also making enquiries and looking to buy.

Analysts believe there are two potential investment strategies for Detroit, the first involving robust cash flow for purchase at a low cost, refurbish and rent and then a strategy for capital growth over time.

'Detroit was in a terrible state when we first looked at investment opportunities there. However, this worked in our favour because we approached the City and offered to assist with the housing and economic regeneration by bringing in international investment. This led to the City endorsing our product and also offering a significant reduction in taxes for investors," said one commentator.

Analysis shows that employment and the local economy are picking up in Detroit. Auto companies such as Ford and General Motors (GM) are reporting second quarter profits in the $billions. GM"s electric car, the Chevy Volt, is about to go into production for worldwide sales. Chrysler"s Fiat 500 electric car is also planned for 2012.

Although approximately 230,000 workers were laid off when the motor industry crashed in Detroit a few years ago, the industry has already taken on around 15,000 new employees so far this year. Reports indicate 10,000 new auto workers will be required, per year, from 2011 to 2013. US Mortgage collective, Quicken Loans, is creating 4,000 new jobs in Detroit. Plus Marathon Oil Corporation is expanding its refinery and creating 2,000 new positions in the area.

Detroit is also becoming a major player in the film industry. Tax incentives mean that in 2009 parts of 470 movies were filmed in Detroit and a number of 2011 release films are being shot there this year including Scream 4, LOL: laughing Out Loud with Demi Moore, Real Steel with Hugh Jackman and The Mechanic with Donald Sutherland.