Bizchina

Shanghai may wait longer for Disney magic

By Wang Ying (China Daily)
Updated: 2010-07-08 09:48

Cai Ouying, a farmer from Chuansha town of Shanghai, hopes the construction of Disneyland Park will benefit local residents. Wang Juliang / for China Daily

SHANGHAI - The planned Disneyland Park in Shanghai will break ground as early as November, one year after the project was approved by the central government in 2009, sources close to the project said on Wednesday.

"The chosen area to build the future Disney World Resort, formerly an area scattered with homes and farms, has been cleared for construction," said a villager surnamed Ge, who lives in a nearby village that failed to become part of the amusement park.

"There has been huge change in this area in the past half year. After relocation, there are only four or five houses still standing on the spacious plot of land. Apparently, they have not reached a deal with the government over relocation compensation," he said.

China Business News also reported on Tuesday that negotiations for the Disney project have entered the final stretch, and construction is likely to start in November.

Disney refused to confirm the news.

"All we can tell you at this stage is that the final talks between Disney and the Shanghai government have not ended, and to produce a final deal may take a few more months. We will announce the final deal and a timeframe for opening in the future," said Disney China's Shanghai office in an e-mailed statement.

Lu Qilin, director of the Shanghai-based Uwin Real Estate Research Center, expressed concern that Disneyland's groundbreaking may not happen so soon.

"Up to now, no blueprint of this Disney has been seen in public, so it is hard to imagine they will break ground in November without a detailed plan," said Lu.

Apart from the uncertainties, Lu said land and capital, two of the key elements to realize this project, are still not in place.

"The local government had said the relocation will last no more than half a year, but now more than six months have passed, I am afraid their work hasn't wrapped up till now," he said.

According to Lu, how to raise the huge capital required is another issue. The 24.4 billion yuan project will be financed by three large Chinese State-owned enterprises in Shanghai through a joint venture with Walt Disney Company, with stakes of 57 percent and 43 percent respectively.

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Despite the unclear of the starting date, the Disney project has benefited some listed companies. Shares of Jielong Group soared to its daily limit of 10 percent for a second day, and closed at 9.76 yuan. The Shanghai-listed printing firm has nearly 300 hectares of land surrounding the Disney project, which is expected to boost neighboring home prices and consumption volume.

As the largest Chinese investor in this Disneyland, Shanghai Lujiazui (Group) Co Ltd climbed 1.65 percent to 17.21 yuan apiece on Wednesday, beating the 0.49 percent hike of the Shanghai Composite Index.

Properties near the park are also expected to reap a windfall. A commercial project near the park in suburban Chuansha of Pudong New Area is priced at 21,000 yuan per sq m, unchanged in previous months regardless of the recent slowdown in Shanghai's housing market.

Housing transaction volume dropped more than 60 percent in both first hand and secondary markets during the second quarter, and a growing number of property developers started to offer discounts to attract customers, according to Savills Property Services, Shanghai, a leading real estate service provider.

According to Albert Lau, managing director with Savills, the park will draw investments in upgrading neighboring infrastructure such as roads, rail and public facilities. "All these changes will make life there more convenient," said Lau.

However, Chen Sheng, director with the China Index Academy in Shanghai, said that living too close to the park will have to bear the hoards of visitors and the noise generated.