Kaisa unveils plan to build 30b yuan theme park featuring ‘animation city’ in Shenzhen east

Kaisa Group, the Shenzhen-based property developer, announced on Tuesday that it will invest 30 billion yuan to build an international theme park in Golden Bay, eastern Shenzhen.

The Golden Bay International Amusement park will incorporate a theme park with hotels, water park, movie theatre and animation city as well as sports centre across a 1.5 sq km site in the eastern area of Shenzhen. The project is expected to come into operation in 2020, Luo jun, vice chairman of Kaisa Group said at a ceremony to unveil the project. Luo said he is confident the project will benefit from strong consumer demand.

However, analysts expressed concern that the huge price tag for the project was more than Kaisa can afford. The developer has been struggling to restructure its debt after defaulting on US dollar bonds. Kaisa’s Hong Kong-listed shares have been suspended from trading since March 2015.

Zhang Hongwei, a research director at the Shanghai-based Tospur Real Estate Consulting said it is difficult for Kaisa to come up with the necessary funding in the current situation.

Local government support is possible for the Shenzhen property developer, despite there are no indications so far, Zhang said.

A public-private partnership (PPP) model may be suitable for the operation of Golden Bay International Amusement park, he said, adding that Kaisa has not provided any guidance on whether another backer was involved. The public-private partnership model has been used successfully for infrastructure projects such as roads and bridges. Generally the private partner works with local governments under agreements that include construction and long term operation of the assets.

Nevertheless, Kaisa Group has reached a milestone in its yearlong debt restructuring negotiations after a plan was formally approved by bondholders in May. The group recorded total contracted sales of approximately 3.73 billion yuan in October. For the first 10 months, the developer recorded 26.4 billion yuan of contracted sales.

Kaisa’s entry into the amusement park industry will intensify competition in the mainland market.

Kaisa’s proposed Shenzhen park is comparable to Shanghai Disneyland, which debuted in June this year at a cost of 34 billion yuan. Dalian Wanda Group opened a theme park in Anhui in September, its second in China following the opening of Wanda City in Nanchang, Jiangxi province, in May, slightly ahead of the official debut of Shanghai Disneyland. Wanda said it has plans to eventually operate 15 such parks across China by 2020, outpacing Disney in the race to capture the growing market for domestic tourism. Other sites believed to be on Wanda’s list include Guangzhou, Hefei , Harbin , Wuxi , Chengdu and Guilin.

Demand for amusement parks in China has been fuelled by rising affluence of China’s middle and upper-middle classes, which are expected to account for nearly 50 per cent of GDP consumption by 2030, according to estimates from ANZ Bank.