Asian Theme Parks Big Time

Just more than 100 million admission tickets were sold in 2011 for theme parks throughout Asia, which is one-third of all theme park tickets sold worldwide, according to a recent report.

The study comes from Hong-Kong-based financial consultant AECOM and the results appeared in USA Today.

Part of the reason is that almost one-third of China’s 2,500 theme parks opened in the past two years. The number of total theme parks in the country is expected to surpass the number in the U.S. before 2020.

However, 70 percent of the parks in China are losing money, but that doesn’t mean the companies who invested in them are losing money. In many cases these companies own the land surrounding the parks and real estate values in the vicinity of theme parks are skyrocketing.

“Most of the money investors in theme parks make comes from adjacent commercial and residential developments,” Feng Yuguo, secretary-general of the China Association of Amusement Parks and Attractions, told AsiaOne News.

As an example, he mentions Victory Kingdom, an amusement park just outside of Beijing. The area had been designated an economic and technological development zone in 1991, which attracted sizable investment from some 1,200 enterprises both domestic and foreign.

One company invested heavily in Victory Kingdom, as well as the resort areas around the park. Because amusement parks are categorized by the government as being “cultural,” there are no restrictions to development, which are imposed in order to “cool” the general real estate market.

Consequently, investors can buy land for amusement parks relatively cheap and then erect adjoining apartments and hotels, which make a lot of money.

For this reason, a lot of developers who traditionally deal in housing and commercial properties are getting into the tourism sector. The authorities have noticed this loophole, and last year the city of Beijing banned the new construction of theme parks above a certain size.

The success is ironic, since most of the theme parks built in China prior to 2000 have gone bankrupt because the only revenue their operators saw was from the parks themselves, and amusement parks are notoriously expensive to operate.