Detroit’s iconic structures — Diego Rivera’s industry murals, Joe Louis’ fist and the majestic Fox Theater — are forceful reminders that this is a city of gritty fighters, builders and creators. But as the meltdown of the United States auto industry continues to stab at the heart of Detroit, the city’s modern-day ruins have become tragic symbols of a city struggling with abandonment and decay.

As Detroit continues the fight of its life, artists and visionaries are slowly returning to the city to take advantage of the cheap rent and open spaces. While some have compared Detroit to a war zone, its burgeoning artistic community looks at it like a playground.

"I see the magic here. This city has been known to come back," artist Tyree Guyton said. "There's this new energy that's creating art all over the city. [A colleague] said in the past that the new industry in the city of Detroit is art and culture. I believe it. I see it."

Like the city itself, Guyton's masterpiece, the Heidelberg Project, has seen its share of adversity. Guyton uses paint and other people's discarded junk to create displays such as houses adorned with stuffed animals and polka dots, scrap metal statues and politically incorrect cigarette adverts, transforming one of Detroit's most dangerous areas into a colourful outdoor art park that now spans two blocks of Heidelberg Street on the east side of the city. After fighting off partial destruction twice and nearly two decades of social and political opposition, the city has finally embraced Guyton's eccentric dreamworld. The Heidelberg Project celebrates its 25th anniversary this year.

Grants totalling more than $200,000 since 2009 - and hopefully a pending grant of $300,000 - will provide funds for significant expansion and a new arts centre.

In midtown, spaces that once belonged to the auto industry have found new life through the arts. An abandoned auto dealership has been converted into the 22,000-square-foot Museum of Contemporary Art Detroit. The graffiti-covered museum recently received a $100,000 grant which it hopes to use to turn its parking lot into a sculpture park. The Russell Industrial Center is an abandoned auto body factory turned artists' haven, where more than 250 artists, craftsmen, designers and entrepreneurs have studios in the colossal warehouse.

Beyond the United Artists Theater deteriorated opulence and the Michigan Theater's peeling gilded walls, Detroit is still home to the second-largest theatre district in the country. Audiences can see Broadway-style musicals in several of the city's ornate theatres and the city's smaller companies provide the opportunity to see quality plays at an affordable cost.

Frannie Shepherd-Bates, artistic director of the Magenta Giraffe Theatre, said she decided to work in Detroit to help strengthen the community and combat the flight of young artists heading for Chicago and New York.

"The economic downturn here has presented a blank canvas to us because we can create whatever we want here, because we've got nothing to lose," she said. "More artists are staying here or they come back here after they graduate. All of these new theatre companies are popping up, so there's more work available then there was before."

Corktown, one of the city's oldest neighbourhoods, is perhaps the most compact example of Detroit's artistic rebirth.

PJ's Lager House, one of the city's best dive bars and independent music venues, offers cheap drinks and live music nearly every night, proving that the music scene where Iggy Pop and The White Stripes developed their chops is still alive and well.

Across the street from the dilapidated Michigan Central Station is Slows Bar BQ. Shortly after it opened in 2005, businessmen and suburbanites started travelling to the city to join the locals in a perpetual line to sample the pulled pork, brisket, ribs and excellent craft beer selection.

Now, a string of incoming businesses are hoping to capitalise on the revitalisation that BBQ joint has helped inspire. Opening within the next few months on the same colourful 19th century strip of Corktown, Astro Coffee will offer up a rare cup of gourmet brew and the Sugar House Bar, named in reference to the infamous Detroit prohibition-era Purple Gang (formerly known as the Sugar House Gang), will serve up a myriad of classic cocktails.

Several other businesses are set to open in the neighbourhood this year, including Mercury Burger Bar, Onassis Coney Island - serving classic Detroit dogs with chilli, mustard and onions - and the reopening of Baile Corcaigh Irish Restaurant and Pub.

The growing success of the neighbourhood means Hostel Detroit is opening just in time. Situated in North Corktown, the city's first hostel in about 15 years will offer cheap beds to visitors who dare to discover that there's more to Detroit than high rates of crime and unemployment.

"I like what's going on in Detroit right now. There's a great movement," Guyton said. "It's a very exciting time, and those who understand that and see it, they come."