A FAIRY TALE IMPACT
The opening of the new Disney Resort in Pudong is set to give Shanghai’s retail and property sectors a massive boost
The start of the new year has been a very busy time for Lu Jianxin, a real estate agent with Shanghai Huayu Property Ltd. He has been getting about 50 phone calls every day as hundreds of people have been eager to find out if he can help them find retail properties located near the Shanghai Disney Resort, which is scheduled to open this summer.
Lu’s response to most of them has largely been the same — that 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 the Disney resort,” said Lu.
After more than six years of construction and preparation, Shanghai Disney Resort is set to welcome its first visitor on June 16. This particular date was chosen because the number “6” — deemed an auspicious one that symbolizes success —appears several times.
According to data from Centaline Property Agency, the average price of commercial properties within a 5-kilometer radius around the Shanghai Disney Resort have grown more than 300 percent in the past five years, from some 20,000 yuan ($3,037) per square meter in 2011 to a peak of 72,000 yuan as of January 2016. This phenomenal growth rate was among the highest in Shanghai, similar to those in prime locations such as Nanjing Road, Huaihai Road and Lujiazui.
In comparison, the average price of residential properties in the same area doubled from some 20,000 yuan per square meter to 40,000 yuan per square meter in the same period.
“Surging prices of commercial properties are a result of limited supplies and high demands. We estimate that the prices may grow further but at a more steady pace in the next half of 2016 after the opening of the resort,” said Joe Zhou, head of research for JLL East China.
Real estate professionals also believe that the opening of the resort will help boost retail consumption across the entire city. The Disney resort is expected to receive more than 10 million visitors in the first year, and the brand would as a result generate more than 45 billion yuan across all its businesses in the city, according to a report by commercial property services firm RET.
When 70 million people visited the Expo 2010 Shanghai China, the combined consumption exceeded 48 billion yuan, according to data from Shanghai’s statistics bureau. The expenditure on dining alone was more than 2 billion yuan. Market insiders said that Shanghai Disney Resort’s impact on the retail market may be even more obvious because the resort is a permanent facility that can attract visitors to stay in the city for longer periods.
Lu Wenxi, manager of Centaline Property Agency, estimated that for every 1 yuan spent on admission tickets to the Disney resort, another 8 yuan will be spent on dining, hotels and franchised products.
“Just consider the more than 10,000 employees who work in the resort and their day-to-day consumption in the neighborhood. The combined size is huge, and it will not only benefit the
China's very own Disneyland will be open after more than six years of construction and preparation.