Homes for the Thrill Seeker

It is fair to assume that buying real estate no longer needs to be the roller coaster ride it once was in an increasingly prosperous Beijing, particularly in the run-up to the 2008 Olympic Games.

But, in fact, you may really like the roller-coaster ride that Shenzhen OCT Holding Company, a government-run property developer, has in mind for you in their latest high-profile offering.

It seems roller-coaster rides and themed entertainment are ties that form a bond between a 1 billion yuan (US$124 million) urban community called Beijing OCT and the city's first major thrill-seeking theme park, Happy Valley Beijing, which is being built nearby on a 1-square-kilometre site for 1.5 billion yuan (US$187 million). Both Beijing OCT and Happy Valley Beijing are under construction on a site adjacent to Hongyan Qiao on the Fourth Ring Road, beyond Jinsong Qiao.

Benjamin Lu, marketing director for Happy Valley Beijing, said, "We believe young Chinese people want to be with other young people. People, who at the same time, can enjoy high quality popular entertainment."

 

Theme park development can be a tricky business in China. Even so, in time for this summer vacation, OCT will open the 100-hectare fantasy theme park alongside the first phase of 50 hectares of commercial merchandising, including a number of restaurants and hotels. This will coincide with the second phase of 34 hectares of themed residential real estate being developed alongside.

 

Ding Xin, Beijing OCT's general manager, said, "Normally the target market for real estate in China is family. But Beijing OCT is targeting a different market sector, young adults who have money and who like to have fun."

 

This target market is one of middle-income earners with average salaries of 3,000 yuan (US$374.10) per month. In Beijing and North China region, OCT has a potential market of 30 million people to draw on for their theme park, which it hopes will produce an annual attendance of 2.5 million in the first year, increasing to 3 million per year afterward.

 

Disney was the first to begin developing the resort and time-shared holiday apartment concept in the United States during the 1970s, targeting families seeking entertainment at its theme parks. Amusement parks began to do good business in the United States in the years of the great exhibitions at the turn of the 20^th century. This continued through the 1920s, the golden age of amusement parks, in the years leading up to the Great depression of the 1930s when parks began to close in great numbers. All this changed years later when Disney opened its first theme park in 1955. Today, thrill rides and fantasy game lands are the norm with additional industry sectors joining the fray.

 

OCT's conceptual objective is to increase the value of the land upon which both developments are built thereby increasing the value of the property being bought.

 

More than 3,000 apartments with an average value of 1.2 million yuan (US$149,652) will be for sale in development by the time it is completed in 2008. The first phase of the residential units, 20 buildings incorporating themes of the Italian Renaissance, went on sale in late 2005. They were sold out within six months. The final phase of unit sales is expected early in 2007.

 

The land upon which both developments are being built belongs to the Chinese Government and Nanmofang County, and the latter is a shareholder in the venture. This means that the value of the land is excluded from the investment cost of the development of the projects, making them more financially viable.

The Olympic Games has added another dimension to the project. The OCT project was included in the city's planning for the 2008 Olympic Games; the site is not far from the Games' tennis and badminton courts.

 

"The Olympic Games was another important factor driving the project," said Xin.

 

The entire complex is set to be finished in time.

 

Both projects are part of Shenzhen OCT Holding Group, a joint venture partnership development company between Hong Kong overseas Chinese investment tourism company CTS and the Chinese government. Established in 1985 and led by CEO Ren Kelei, OCT has been responsible for China's only financially viable theme park developments, such as Splendid China, China Folk Culture Villages, Window of the World and Happy Valley Shenzhen in Shenzhen.

 

"We have the experience to be able to repeat in Beijing our previous success," said Din.

 

OCT began developing its business concept in 1989 with the opening of Splendid China, a miniature China theme park. This was to be the start of a 5-square-kilometre development that would go on to become a highly successful tourist development zone with hotels, retail outlets and restaurants.

 

"The first theme park developed real estate valued at 30 million yuan (US$3.74 million). The park was deemed a success with five million visitors in its first year," said Liu. On the strength of these numbers, OCT is investing a whopping 1.5 billion yuan (US$187 million) in Happy Valley Beijing, hoping to repeat the success of Happy Valley Shenzhen that makes 100 million yuan (US$12.5 million) in annual profits with more than three million visitors annually.

 

With each visitor paying 140 yuan (US$17.40) and eager to queue for four-six hours for a single ride in Happy Valley Shenzhen, this should be easily achieved.

 

The idea to market real estate alongside popular entertainment is not new in many parts of the world, but before OCT opened Splendid China in Shenzhen, it was not a proven idea in China.

 

"Eighty percent of all theme parks in China go bankrupt, and this has badly affected China's tourism," said Xin.

 

Since 1986, there have been more than 2,000 entertainment parks built in China, only three of which have been said to make money. Two of these were Window of the World and Happy Valley Shenzhen.

 

"The entertainment companies had no understanding of how to create the right experience for visitors to their parks. OCT has been in business for 15 years and is now China's biggest theme park group, with a total of 10 million visitors a year. Revenue increases every year, leading with subordinate industries in real estate and electrical products," said Xin.

 

Happy Valley Beijing will provide a modern shopping complex, an IMAX theatre and seven cinemas. A giant frisbee, shoot-the-chutes and a flying rollercoaster, that allows riders to "fly like superman," plus space shots and kiddie rides are expected to maintain the attention of thrill seekers and keep them interested in surrounding enterprises and real estate properties.

 

"OCT has purchased a sizeable quantity of land in Chengdu and Shanghai where they hope to continue the concept with equal success," said Liu.