As the number of theme parks in Asia rise, Asian Property Review examines its impact on the surrounding properties.
In 2017, a study in America concluded that there are no direct correlation between prices of real estate and a nearby theme park. Neighbourhood protests were held to protest against the building of a Legoland theme park in the vicinity of the neighbourhood of Goshen’s Arcadia Hills in New
York. The protesters were arguing that the building of a theme park would cause traffic congestion, noise and air pollution, harm flora and fauna, ruin the town’s character, overburden emergency services and bring undesirable crowds to the neighbourhood.
On the other hand, New York’s Orange County Office of Real Property Tax Service released a report claiming that the property values of neighbours of Legoland would increase if a park was built. But the report was based on the recent rising prices of residences that have been in the vicinity of
theme parks in Florida and New York City for decades.
NO EMPIRICAL STUDIES?
“Existing research has found insufficient evidence to conclude that the building of a theme park would decrease values of surrounding properties,” says the study. The report was however based on the effect of sports stadiums, not theme parks, as very few theme parks were built after 1990s.
In what is considered the biggest market for theme parks, China’s tourism estate industry, although emerging in the 1990s, has also not been empirically examined. Such tourism real estate is characterized by the development of largescale tourism resources (e.g. resorts and theme parks) along with residential properties, under the assumption that they would increase property value. “However, the effects of such “built” tourism resources on housing value have not been empirically examined,” says a report.
There is an attempt though to find out the impact – a pricing model was built using a sample of 294 real estate transactions in the Overseas Chinese Town area of
Shenzhen, China in 2015. Findings indicated that while distance to the metro and the architectural features of the property itself had significant positive effects on tourism real estate value, distance to theme parks was found to have a negative effect on price.
As the constructions of theme parks alongside residential/vacation properties represent a typical model of tourism real estate, the findings urge the industry to reconsider the development of theme parks and its impact on the surrounding environment.
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POSITIVE SPILLOVER
Be that as it may, the balance of opinion and experience so far has shown that it is likelier than not that the values of housing and commercial properties in some areas close to theme parks are potentially going to increase when the large theme park starts being built. The economic spillover can be massive. There will be increased investments and jobs, and revenue collection. Theme park improves the local tourism economy, including vacation, hotel, restaurants, shopping, entertainment, transportation and the rise of Gen Y.
In Asia, theme parks are welcomed in the community as many view it as an attraction that brings in jobs, tourists and demand for accommodation. In Sunway Lagoon Theme Park, Malaysia, for example, surrounding property prices were on an uptrend – but this was not solely because of the theme park alone. The developer has very strategically integrated the theme park into a mixed development comprising a huge shopping mall which has many retail outlets, a Cineplex, conference centre, hotels, shophouses, residences, a hospital, colleges and universities with convenient access to public transport. It became a self-sufficient township that caters to both locals and foreign tourists and students. It’s hard to imagine this was once a former 800-acre mining land.
The surrounding developments also provide the mall with steady visitor traffic, ensuring a vibrant and dynamic township. The developer thus has the advantage of enjoying revenues from both sources — visitors to the park, and the recurring income generated by the rental of retail space.
In Jakarta, Sydney-based Crown Group will build Jakarta’s first luxury waterfront vertical residential project on a 4.7-hectare area located to the west of the Ancol recreational park in North Jakarta. The park known also as Ancol Dreamland is an integral part of Ancol Bay City, a resort destination located along Jakarta’s waterfront, in Ancol Kelurahan, Pademangan, Indonesia. Opened in 1966, it is currently the largest integrated tourism area in Southeast Asia, boasting an international championship golf course, a theme park, hotels and other recreational facilities.
Before Ancol Dreamland, the area was marshy area consisting of a mosquito-infested swamp and fish ponds, and the source of a century-old malaria outbreak in Batavia. Today, the 552-hectare recreation area is known as the Ancol Jakarta Bay City, containing hotels, cottages, beaches, a theme park, traditional market places, an oceanarium, a golf field and marina.
South Korea’s Everland theme park was similarly a wasteland located in Yongin, Gyeonggi Province, before it was transformed into vast forests with grandiose views where Everland stands today.
“When Everland was first opened to the public in 1976, the area had bad access compared to big cities like Seoul. But the development of the metropolitan area of Seoul and transportation system led to huge land development in the area around Everland,” shares Samsung C&T‘s Executive Vice President/GM Tommy Jeong.
A similar story may indeed occur in Melaka, where the world-renowned Encore Melaka, an immersive performance set in Southeast Asia’s first 360-degree rotating audience platform tells Melaka’s untold stories in spectacular fashion. Performed by 200 local performers on a 240-meter long stage, the recently opened theatre is set to attract more than 1.4 million annual visitors and will put Melaka on the world map for all theatre-lovers.
Encore Melaka is the centrepiece of the 138-acre Impression City which will offer a vibrant mix of entertainment, shopping, dining, art, culture and lifestyle attractions.
Nearby Encore is Splash World @ Harbour City water theme park which is located 14 floors above ground. The 500,000 sq ft four-storey Splash World is the world’s first ‘in-the-sky’ theme park and will feature an indoor and outdoor waterpark experience with more than one kilometer of water slides.
When completed in 2020, Splash World will be the largest water theme park in Melaka and is expected to attract up to 1 mil visitors annually after the first year of operation, with an estimated average of 5,200 visitors a day. It is part of an integrated development, Harbour City consisting of hotels
and an oceanic themed retail mall.
The Melaka themed attractions are built on reclaimed land along the coast fronting the Straits of Melaka. The surrounding properties in this area which are just about 5 minutes’ drive to Melaka’s UNESCO World Heritage Sites will no doubt experience a price increase once the number of visitors ramp up as Melaka evolves into a metropolitan city filled with an increasing number of attractions.
Says Emre Buyukgungor, Regional Sales Director (SEA), of Polin Waterparks, one of the top waterpark designers in the world and the designer of Splash World: “Waterparks are a good example of a development that can cause rising demand for properties and more developments in the
surrounding area. There are many ongoing projects all around the world where this is happening as people are willing to buy properties with a waterpark inside.
DRIVER OF DEMAND
During the Great Financial Crisis, property values in Orlando, Florida were devastated; giving rise to a huge number of foreclosures and empty and dilapidated homes. However, since the completion of the Wizarding World of Harry Porter at the Universal Orlando Resort in 2010, which attracted a record number of tourists, there was a newfound demand for real estate around the area. Since 2011, sales especially of foreclosed and affordable properties have picked up as workers of the theme park and businesses surrounding it purchase them on the cheap.
The popularity of Harry Porter also rubbed off on other theme parks there as well and pretty soon, more people flocked there causing Orlando to come out of the housing doldrums faster than other markets in the US.
Indeed, theme parks’ impact on the surrounding real estate cannot be denied.
Malaysia’s Genting Highlands is another good example where prices of surrounding properties are speculated to rise in anticipation of a massive influx of visitors upon completion of the first 20th Century Fox World Theme Park in the world in early 2019. A spate of condominium and serviced apartments have been launched in the Midhills area since the last few years with launch prices ranging from about RM500 to RM1,000 psf, which is as high as some condo developments in prime areas of Kuala Lumpur.
Many investors buy in Genting to rent out to tourists as well as for own stay during holidays. Most tourists stay for at least one night even though it’s only an hour’s drive to Kuala Lumpur. Moreover, despite having the largest hotel in the world, First World Hotel, the shortage of rooms in Genting Highlands especially during public holidays, weekends and school breaks is still a chronic problem prompting other developers to fill in the gap.
To sum up, it would be fair to say that in general, themed attractions are long-term investments that have a positive multiplier effect across several sectors, such as retail, food and beverage, and hotels. They create jobs and bring in tourists. Theme parks also complement the surrounding commercial and residential developments. When the crowds come, there will be demand for property.
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