Residential real estate prices near the soon to open Shanghai Disney Resort have surged by 35 percent in anticipation of the resort’s official debut next month. The good news for buyers and developers is that, based on the history of Disney theme park startups, that’s not likely to be a momentary economic blip.
The 963-acre (389 hectare) Shanghai Disney Resort, mainland China’s first Disney development, will open June 18 in Pudong district’s Chuansha town, after a delay of nearly one year as city officials and Disney executives made sure that the mega-project was ready for the mainland’s leisure hungry citizens.
The second day of the park’s test run in May saw 30,000 visitors view its collection of rides, hotels and particularly its Enchanted Storybook Castle, a 196-foot-tall home to all of the company’s large collection of princesses. The resort’s theme salutes traditional Chinese culture as well as Disney films.
Vanke, Jingrui See Project Prices Jump
Nearby real estate is already benefitting from interest in the leisure destination. China Vanke’s new project at Vanke Feicui Park in Pudong’s Zhangjiang area saw selling prices rise 35 percent in the last year, hitting 65,000 yuan per square metre. That spike includes a 12 percent rise in just the last two months, according to the SouFun real estate portal.
While prices are going up in suburban towns near Disney, the impact in Chuansha itself is muted, according to one analyst who has studied the market.
“For the residential sector, the Chuansha area did see a short-term frenzy on land prices and transactions when the news was first announced in 2009, but is gradually back to the city’s average growth level since then,” said Chester Zhang a researcher with property consultancy Savills in Shanghai. Zhang noted that, “People may not want to live too close to Disney. The large volume of visitors anticipated will create traffic and other headaches for local residences.”
In Pudong’s Huinan township, listed developer Jingrui Holdings saw prices at its French Lakeside Villa project rise from RMB 25,500 per square metre during its January presale period to RMB 30,000 per square metre this month, according to a report in the South China Morning Post. The new project is 15 kilometres from the Disney resort, and 80 villas in its first two sections have already sold out.
One price driver has been local supply constraints nearby. There were a limited number of homes available in the areas near the Disney resort prior to the debut of these latest projects. While Shanghai tightened home-buying policies in March, nearby home prices have continued to rise since the Shanghai Disney Resort project finally got the green light from the central government.
The Shanghai resort’s impact on prices has not been unexpected. A report by the Song Xiao Xiao School of Management at Shanghai University of Engineering Science claimed that the local real estate industry would “flourish” from the resort’s proximity, and would “drive the neighboring area of appreciation” in residential prices, with commercial properties following once the resort actually opened.
Orlando, Paris Parks Catalysed Surrounding Areas
History bears out that optimism. The opening of the Orlando, Florida Walt Disney World in the United States provides a good roadmap for what can be expected in Shanghai.
The opening of that resort in 1971 had an economic impact that transformed the sleepy Orlando region, which relied previously on agriculture, into a huge economic engine. The theme park and associated developments produced 50,000 new jobs, generating an estimated $6.6 billion in new wealth for the area in its first ten years of operation, a figure that did not include tourism revenues or housing appreciation. The resulting housing demand by the new workers transformed Orlando into Florida’s fastest growing city.
Savills’ Zhang expects Shanghai Disney to have a similar impact on the city. “This will be a long-term benefit for Shanghai for growing towards a true global city, especially as Disney plans to expand the park in the future,” the analyst predicted.
Although it financially struggled at first, Disneyland Paris wound up generating a similarly large impact on the local French economy, generating an estimated 55,000 new jobs in its first 20 years.
A study conducted on behalf of the Inter-ministerial Delegation of the Euro Disney project, co-funded by the Marne-la-Vallee Public Development Body (EPAFRANCE) and Euro Disney, indicated Disneyland Paris generated €50 billion of added value over 20 years, an average of €2.5 billion per year, billion per year, mainly to benefit the Ile-de-France region (89% of the total), and the Seine-et-Marne area where the park was located. The study also indicated that the park aided commercial development in the Paris suburbs.