Mickey Mouse performs at Shanghai Disney Resort. [Photo/Xinhua]

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

"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.

A worker walks through the construction site of a commercial property project in Pudong New Area of Shanghai. [Photo/China Daily]

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.

Zhao said 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.