Shanghai Disney first phase to cost 24.5b yuan

SHANGHAI - Construction at the Shanghai Disneyland project is expected to begin soon and the investment for the first phase of the project will amount to 24.5 billion yuan ($3.74 billion), said the city's Mayor Han Zheng.

Han was speaking on the sidelines of a news conference at the 11th National People's Congress and the 11th National Committee of the Chinese People's Political Consultative Conference.

"Earlier reports about the total investment in Shanghai Disneyland are not accurate, and I can tell you the investment for the first phase is 24.5 billion yuan. We hope this project will break ground soon," Han was quoted as saying by the Oriental Morning Post on Monday.

The Disneyland project will fuel an economic boom in the city and create thousands of jobs in the tourism and hospitality industries, analysts said.

"Tourism-related industries will benefit from this project, which combines elements of entertainment, modern culture and fashion. In addition, the hospitality and property sectors will get a boost," said Wang Dawu, a professor specializing in tourism research at the Shanghai Academy of Social Sciences.

Earlier reports said only 116 hectares have been allocated for the Disneyland project in Pudong New Area, and the tight land budget will limit the theme park's influence.

However, Wang estimated that Shanghai Disneyland will expand to 1,000 hectares in the future to match the enormous demand from the mainland market.

"The area of 116 hectares is just the core part. Hong Kong has been expanding its Disneyland constantly, and in Shanghai there will also be an expansion around the core area to hold growing numbers," said Wang. "I guess the size of Shanghai Disney will only be smaller than those in Orlando and Los Angeles in the United States," he added.

Yang Yuechen, senior manager of the professional services division with Knight Frank in Shanghai, a leading real estate service provider, said Shanghai needs to build a world-renowned cultural project to match its growing global influence.

"As the nation's business hub, Shanghai lacks an eye-catching site for tourism, and the future Disneyland could be the one," Yang said.

According to Yang, the success of Expo 2010 Shanghai has demonstrated the city's ability to receive large numbers of tourists from home and abroad. Compared with Hong Kong, Shanghai Disney will be more accessible and convenient for domestic tourists.

Shares in 18 out of the 23 listed companies connected to the Disneyland project reacted positively to the news on Monday, according to a database monitored by Orient Securities.

Shares of Shanghai Jielong Industry Corp Ltd increased 2.02 percent to close at 12.64 yuan each in Shanghai on Monday.

The printing enterprise has nearly 20 hectares of land surrounding the Disney project, which is expected to boost local land prices.

Zhonglu Co Ltd, maker of the well-known bicycle brand "Forever", climbed 3.14 percent to 17.10 yuan each on Monday, beating the 1.83 percent rise of the Shanghai Composite Index. Zhonglu's share price surge is due to its acquisition of 46.67 hectares of land near the site of the future Disney amusement park.

Properties near the park are also expected to get a windfall. The price of commercial residences around the Chuansha area of Pudong New Area increased 21.4 percent in 2010 from the previous year.

"With the construction of the entertainment park, there is going to be considerable interest in properties around this area," said Zhao Baogen, an analyst from Uwin Real Estate Research Center.

Yang said that the park will draw investment in upgrading neighboring infrastructure such as roads, subways and public facilities. "All these changes will make life more convenient," she said.

The new park will be Disney's fourth outside the United States, after Paris, Tokyo and Hong Kong.

China Daily

(China Daily 03/08/2011 page16)