Real es­tate Dis­ney

Com­mer­cial and res­i­den­tial realty in the Shang­hai re­sort’s neigh­bor­hood un­der­goes sea change

China Daily (USA) - - FRONT PAGE - By WUYIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

Com­mer­cial and res­i­den­tial real es­tate in the Shang­hai re­sort’s neigh­bor­hood is nat­u­rally on the rise in value.

The Dis­ney­land ef­fect has changed the com­mer­cial real es­tate scene in the area.” Ma Li­jiang, an agent of Deyi Prop­erty Ltd

“Even if only 10 per­cent of 30,000 tourists come to this town and buy snacks here ev­ery day, this store is go­ing to bring you a great for­tune.” The to-let ad copy of a store in Chuan­sha, a town some 6 km east of Shang­hai Dis­ney Re­sort, just a five-minute drive away, ap­pears ex­tremely per­sua­sive.

Ubiq­ui­tous ads like that pulled Guan Zhixin, 32, a soft­ware pro­gram­mer, to Chuan­sha in search of a store.

He wanted to set up a snacks joint. His think­ing was sim­ple: Dis­ney will likely at­tract mil­lions of visi­tors in the years to come. Some of them will pass through the old town cen­ter in Chuan­sha, and while do­ing so, will likely buy some snacks. Slowly but surely, it would be pos­si­ble to spin a for­tune from snacks.

What Guan did not con­tend with was that prices of such po­ten­tial for­tune-spin­ners had al­ready pierced the roof and were headed sky­ward.

Most of the com­mer­cial real es­tate around the Shang­hai Dis­ney­land that Guan vis­ited were used by in­di­vid­ual own­ers to run con­ve­nience stores, small restau­rants or tea shops.

Now, how­ever, they want out. They are seek­ing ten­ants, given the prospect of high rents. They want ten­ants who would sell higher value-added prod­ucts like jew­elry, fash­ion, art or craft.

“The Dis­ney­land ef­fect has changed the com­mer­cial real es­tate scene in the area. Those sell­ing snacks or daily ne­ces­si­ties are mov­ing out to places where rentals are lower. Although lo­cal res­i­dents wouldn’t need stuff like jew­elry or gifts at neigh­bor­hood stores, land­lords be­lieve huge num­bers of tourists will push up de­mand for such stuff,” said Ma Li­jiang, 24, an agent of Deyi Prop­erty Ltd.

Such prop­er­ties now fetch about 35 yuan per square meter per day, a rate that a third-floor store in a high-end com­mer­cial com­plex in cen­tral Shang­hai would com­mand.

This is far be­yond Guan’s bud­get of some 20 yuan. Five years ago, rental was 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 head of the Com­mis­sion of Com­merce, Pudong New Area, Shang­hai Dis­ney­land re­ceived 27,000 visi­tors per day on av­er­age in its first month of op­er­a­tions. Its av­er­age daily rev­enue was about 15 mil­lion yuan.

Ac­cord­ing to Ming­tiandi Con­sul­tancy, av­er­age rental of com­mer­cial prop­er­ties within a 10 km ra­dius from the Shang­hai Dis­ney Re­sort has risen some 12 per­cent in the past three months. In May, rent av­er­aged 31 yuan per sq m per day. To­day, it is 36 yuan sq m.

This growth rate is higher than the av­er­age 3 per­cent for all of Shang­hai prop­er­ties in the same pe­riod.

Dis­ney­town, lo­cated in the core area of the Shang­hai Dis­ney Re­sort, uses a bid­ding sys­tem to lease out shops and stores. Most of the spa­ces were leased to branded restau­rants, re­tail­ers and lux­ury stores, such as a Ja­panese sushi house with av­er­age rental of 300 yuan per sq m per day, or a Euro­pean af­ford­able lux­ury store with av­er­age rental of 800 yuan per sq m per day, ac­cord­ing to di­an­ping.com.

Neigh­bor­hood res­i­den­tial prop­er­ties have also seen 16 per­cent year- to- date ap­pre­ci­a­tion in rentals to some 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 soft launch of Dis­ney­land in May, ac­cord­ing to data of an­juke.com, an online prop­erty in­for­ma­tion ser­vices provider.

Realty de­vel­op­ments in the Dis­ney­land’s neigh­bor­hood of­ten com­bine res­i­den­tial prop­er­ties and com­mer­cial prop­er­ties, in­clud­ing ho­tels, in the same project. De­vel­op­ers wish to ben­e­fit from tourists who gen­er­ally take a de­tour to street­side stores on their way back home.

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

Realty agent Zhao Hong­fan, 29, who has been sell­ing prop­er­ties in the area for more than three years, said most of the prop­er­ties in the Dis­ney­land neigh­bor­hood are pre-owned, and sup­ply of new homes is lim­ited.

Z ha os aid many of the apart­ments are be­ing bought for in­vest­ment pur­poses. Home­buy­ers in the area do not re­ally in­tend to live there as the neigh­bor­hood is ex­pected to be­come busier, more crowded and noisy.

“Buy­ers can turn their apart­ments into online-listed B&B ser­vices or ser­viced

apart­ments,” she said.

Zhang Hong­wei, an an­a­lyst with Tongce Realty Con­sul­tancy, said in­vestors and de­vel­op­ers need to “plan their in­vest­ment care­fully” based on a de­tailed study of de­mo­graphic pro­file of visi­tors, their con­sump­tion habits and af­ford­abil­ity.

“For sure, Dis­ney­land will at­tract a huge num­ber of tourists to the city, but there is no guar­an­tee that tourists will buy at your store or stay in your house. Plan­ning is re­ally im­por­tant be­fore mak­ing the in­vest­ment,” said Zhang.

KANG KANG / FOR CHINA DAILY

Awork­er­walks through the con­struc­tion site of a com­mer­cial prop­erty project in Pudong NewArea of Shang­hai.

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