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Shanghai Disney effect creates boom in realty

Updated: 2016-09-02

( China Daily Europe )

Commercial and residential properties around the new resort and theme park see surge in price

"Even if only 10 percent of 30,000 tourists come to this town and buy snacks every day, this store is going to bring you a great fortune."

This line is from an advertisement for a store available for rent in Chuansha, some 6 kilometers east of Shanghai Disney Resort, and it was an ad like this that caught the eye of Guan Zhixin, 32, a software programmer.

He wanted to set up a snack shop, and his thinking was simple: Disney will likely attract millions of visitors in the years to come; some will pass through Chuansha's old town center and will likely buy snacks. Slowly but surely, it would be possible to make a tidy sum.

What Guan didn't contend with was that prices of such property were already soaring.

Most of the commercial real estate around Shanghai Disney Resort that Guan has visited is used by individuals for convenience stores, small restaurants or teahouses - but now they want out. They're seeking tenants, given the prospect of high rents, and would prefer to work with someone selling higher-value goods such as jewelry, fashion or art.

"The Disney effect has changed the commercial real estate scene in the area. Those selling snacks or daily necessities are moving out to places where rents are lower," says Ma Lijiang, 24, an agent for Deyi Property Ltd. "Although residents wouldn't need stuff like jewelry or gifts at stores nearby, landlords believe huge numbers of tourists will push up demand for such things."

Shanghai Disney effect creates boom in realty

Such properties fetch about 35 yuan ($5; 4.50 euros) a square meter per day, the same as a third-floor store in a high-end commercial complex in central Shanghai would command.

This is far beyond Guan's budget of about 20 yuan. Five years ago, rents were about 8 yuan, according to Mingtiandi Consultancy, a realty services provider.

Many landlords see Disneyland as a consumption driver. Their view is shaped by hype over statistics.

According to Ma Xuejie, deputy director of the Pudong New Area Commerce Commission, Shanghai Disney Resort received 27,000 visitors a day on average in its first month. Its average daily revenue was about 15 million yuan.

According to Mingtiandi Consultancy, average rents of commercial properties within a 10-km radius have risen 12 percent in three months. In May, rents averaged 31 yuan per sq m a day. Today, it's 36 yuan. This growth is higher than the average 3 percent in Shanghai over the same period.

Disneytown, located in the core of the resort, uses a bidding system to lease out shops and stores. Most spaces have been leased to branded restaurants, retailers and luxury stores, such as a Japanese sushi house with average rental of 300 yuan per sq m a day, or a European affordable luxury store with an average rent of 800 yuan per sq m a day, according to data from Dianping, a business listings website similar to Yelp.

Neighborhood residential properties have also seen 16 percent year-to-date appreciation in rents to 40,420 yuan per sq m, while the city's average housing price is about 34,803 yuan per sq m.

In the Zhoukang area, a 10-minute drive from Disneyland, housing prices jumped 20 percent after the park's soft launch in May, according to Anjuke, an online property information services provider.

Realty projects in the Disneyland's neighborhood often combine residential and commercial properties, including hotels. Developers wish to benefit from tourists who generally take a detour to street-side stores on their way home.

After a long day at the Disney park, some visitors prefer to stay at nearby bed-and-breakfast lodges or budget hotels.

Zhao Hongfan, 29, a realtor who has been selling properties in the area for more than three years, says most of the properties around Disneyland are pre-owned, and the supply of new homes is limited.

Many apartments are being bought for investment purposes, she says, adding that homebuyers in the area do not intend to live there as the neighborhood is expected to become busier, crowded and noisy.

"Buyers can turn their apartments into online-listed B&Bs or serviced apartments," she says.

Zhang Hongwei, an analyst at Tongce Realty Consultancy, says investors and developers need to "plan carefully" based on a detailed study of visitor demographics, consumption habits and affordability.

"There is no guarantee that tourists will buy at your store or stay in your house. Planning is really important before making an investment," Zhang adds.

Shanghai Disney effect creates boom in realty

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