Archives February 2016

Disney Resort expected to bring realty-and-retail boom to Shanghai


Two sales people introduce a housing project to a potential buyer at a Disney commercial property promotion event.

Shanghai Disney Resort, which will open in June, is expected to transform the metropolis’ economy

Lu Jianxin, a real estate agent with Shanghai Huayu Property Ltd, has had some of his busiest business weeks in January since he joined the sector in 2002. Lu receives more than 50 phone calls every day asking him if he can find unoccupied retail properties near Shanghai Disney Resort, the long-anticipated multi-billion-dollar amusement project that is scheduled to open this summer (June).

Typically, Lu tells his callers they should have acted earlier. “Supplies of retail properties are really limited now and prices have more than doubled in the past 12 months. Obviously, investors believe that even a 10 square meter space for a noodle stand will be really profitable if it is close enough to Disneyland,” said Lu.

It’s not just business-minded people who are all excited about Shanghai Disney. Even 13-year-old Zhang Zihao in Hangzhou, Zhejiang province, can’t wait for Disney to open its gates. He has been saving his pocket money for a long time so he could visit Shanghai Disney Resort during the summer vacation.

“The admission ticket price is expected to be announced this week. I have saved 500 yuan ($75.92) so far for the ticket alone, and another 1,000 yuan for dining and accommodation, and another 500 yuan for merchandise like stuffed animals, stationery, T-shirts and gifts for friends. That’s about 2,000 yuan in total.”

The project has been under construction for more than six years now. Jun 16?that is, 6-16-2016?has been apparently chosen as the date of opening because the three 6s are believed to be auspicious, heralding success.

Real estate professionals believe any success of Shanghai Disney Resort would entail all-round benefits for the area. For example, visitors in huge numbers would likely spark a retail boom in Shanghai.

According to Centaline Property Agency, the average price of commercial properties within a 5 kilometer radius of Shanghai Disney Resort, including shops and restaurants, has grown more than 300 percent in the past five years.

What used to cost some 20,000 yuan per square meter in 2011 would now command a price of more than 60,000 yuan per square meter. Some properties are even priced more than 72,000 yuan per square meter, about 50 percent higher than that of other suburban areas in Shanghai.

The growth rate is among the highest for premier locations such as Nanjing Road, Huaihai Road and Lujiazui.

In comparison, the average price of residential properties in the same area doubled from 20,000 yuan per square meter to 40,000 yuan per square meter in the same period, similar to that of the city’s average growth rate.

“Surging prices of commercial properties are a result of limited supply and great demand. We estimate that the prices may grow further but at a more steady pace in the second half of 2016, after the opening of the resort,” said Joe Zhou, head of research for JLL East China.

Besides the Disney fever, another reason for the rocketing retail property prices is the expectation that foodfalls will be huge, exceeding 10 million visitors/trips in the first year, and reaching some 30 million in the years to come.

Their annual combined consumption in one year during Disney visits and other locations in the city may exceed 45 billion yuan, according to a report by commercial property services firm RET.

When 70 million visitors visited the May 1-Oct 31 Expo 2010 Shanghai China, their combined consumption exceeded 48 billion yuan, according to data of the city’s Statistics Bureau. Spending on dining alone was more than 2 billion yuan.

Property market people expect Shanghai Disney Resort’s impact on the retail market to be stronger than that of the 2010 Expo for the simple reason that the resort project is a permanent one, and may attract visitors who wish to stay in the city for a longer time.

Lu Wenxi, manager of Centaline Property Agency, said it is estimated that for every 1 yuan spent on resort admission tickets, another 8 yuan will be spent on retail consumption such as dining, hotels, and franchised products.

“Just consider the more than 10,000 employees who work at Shanghai Disney and their day-to-day consumption in the neighborhood. The combined size is huge, and it will not only benefit the resort but the entire city,” said Lu.

Urban infrastructure in the Shanghai Disney Resort area and its neighborhood will further facilitate visitors’ traffic, dining, accommodation and shopping, making consumption touch-points more accessible, said analysts.

The metropolis administration has already planned the Shanghai International Tourism and Resort Zone or SITRZ, an international tourism stretch covering 20.6 square km, including 13 square km for hotels, restaurants, entertainment centers, parks and sports facilities, which will be linked by two subway lines that will reach the city center.

Hotel chains have been developing new properties around the Disney project, including budget hotel chains such as GreenTree Inn and Jinjiang Inns. As many as 1,000 bed-and-breakfast rooms may be available in villages that are close to the Disney resort when they pass the safety and other requirements to serve visitors demands, according to Pudong District authorities.

Department stores and outlets are also under development around the resort.

In 2014, retail outlet developers Value Retail and Shanghai Shendi Group, the operator of SITRZ, announced a joint venture to build luxury shopping compound next to the Shanghai Disney Resort covering 50,000 square meters, hosting more than 100 brands.

Siu Wing Chu, head of retail at Savills China, said key retail hubs in Shanghai, including the Yuyuan Garden, the Bund, Huaihai Road and Nanjing Road are all going through brand upgradation and renovations, to sport a new, cheery look.

“We have seen several franchised Disney product stores scattered around Shanghai, and we believe that visitors to Shanghai Disney will also go sight-seeing around the Bund, Nanjing Road and Yuyuan Garden area. We expect rentals to grow in these key locations,” said Chu.