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Can Detroit go from Motown to grow-town?

Can foreign investment transform 'ghost town'?
Can foreign investment transform 'ghost town'?

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Can foreign investment transform 'ghost town'? 03:18

Story highlights

  • Detroit was once a powerhouse of automotive manufacturing but has suffered in recent years
  • International investors are snapping up sites for a fraction of their previous value in the city
  • Some are looking to build big property development projects on the land they buy
Detroit was once known as the automobile capital of the world -- a global symbol of modernity and a testament to the power of American capitalism.
After decades of industrial decay, however, the "Motor City" finally crashed when it filed for municipal bankruptcy in July 2013.
Many long-time investors fled for safer havens beyond the city limits as property prices plummeted and businesses suffered.
But not everyone took flight.
Others settled in for the long haul, sure that the city that brought us the sounds of Motown and some of the most iconic cars ever built would bounce back.
One such man was Fernando Palazuelo.
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The Peru-based developer stunned Detroiters by purchasing the abandoned Packard automotive plant earlier this year -- one of the most famous buildings to be sold after the city filed for bankruptcy and the most emblematic eyesore of Detroit's fall.
But Palazeulo sees beauty and possibility amid the ruin of the Packard site.
"I think that the Packard Plant is in the best location ... surrounded by extraordinary highways, railways, airports, very close to Canada," Palazuelo said.
A look at the numbers illustrates why international investors Like Palazuelo are entranced by Detroit's under-appreciated assets.
Palazuelo bought the 325,000 square meter (3.5 million square feet) Packard space for just $405,000.
To put these figures into context, San Francisco's average price per square meter of office space is about $6,000.
With Detroit home to an estimated 78,000 abandoned buildings, it is little wonder then that international buyers spy an opportunity with big potential returns.
A Chinese firm bought three properties downtown last year.
In around 15 years, at a cost of approximately $350 million, Palazuelo envisions transforming the Packard site into a residential, commercial and industrial hub.
"Ten years (and) you will not recognize it," he said excitedly. "You will think it was always in perfect shape. So we will do it."
Six years ago Palazuelo invested heavily in Lima's historical center, an area also blighted by vandalism and decades of deterioration.
He bought property at rock-bottom prices then sat back and watched the value quickly rise.
Detroit, and the world, will be watching closely watch to see if history repeats itself and if Palazuelo's financial prediction bears fruit.