Who’s been more over-excited this week: Shanghai’s seven-year olds or the city’s property developers?
In Talking Point we mentioned that Shanghai has finally signed up to host the sixth Disneyland park. It will join existing parks in California, Florida, Tokyo, Paris and Hong Kong.
Less than two hours after the decision was made public, a nearby parcel of land in Chuansha in Pudong New Area was snapped up at auction for Rmb1.19 billion ($173 million) by a Xiamen-based property developer.
The 56,670 square-metre plot is situated just 3.3 kilometres away from the proposed Disney site.
A total of 15 bidders, including Poly Real Estate and Shanghai Jielong, competed for the land.
The winner, Xiangyu Real Estate, a state-owned company from Fujian, offered more than two and a half times the reserve price, according to the local authorities.
“The price is beyond our reach,” a Jielong executive told the China Daily after the auction. “It’s hard to imagine that the bid was so high.”
Some wonder if Xiangyu got a little caught up in the moment (paying Rmb14,042 per square metre) and will end up struggling to make a return at that price.
The Shanghai Morning Post believes that Xiangyu will have to charge at least Rmb20,000 per square metre for the proposed flats to breakeven – far in excess of average prices in nearby projects, which range from around Rmb8,000 to Rmb13,000.
But not everyone thinks Xiangyu’s bid was quite so crazy. The Hong Kong Economic Journal speculates that once Disneyland is built, prices could go as high as Rmb30,000 per square metre.
Expectations that Disney would finally get the nod had already pushed up property values in the district. Homes in Chuansha have more than quadrupled in price in anticipation of the improvements in local infrastructure that the park will bring, says DTZ, an international property consultancy firm.
And after Xiangyu’s record-setting bid, local homeowners were quick to hike their own asking prices by 40-50%, says the Shanghai Daily.
While that may sound unrealistic, property prices in the area are still expected to jump another 20% in the next six months, with the further newsflow on the Disney project, the newspaper thinks.
“People in Chuansha are seeking to sell their homes at high prices as the government is expected to improve the transport system and public facilities in the district,” explains Clement Luk, director of property brokerage Centaline Property in Shanghai.
The limited supply of land in the area bordering the future park is another factor in surging values. The parcel sold last week was the first to be offered in Chuansha for residential use since 2005. So it seems that only a lucky few will get to welcome their new Disney neighbours in three years time.
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