A recent survey of real estate professionals and homeowners nationwide, conducted by HomeGain.com, essentially determined that real estate agents, contrary to their reputation for optimism, are being more realistic about property values and the future of the real estate market than homeowners. In light of some daring plans over at Walt Disney Co., I wonder what that survey would have looked like if HomeGain had included developers.
Last Wednesday, Disney unveiled plans for Golden Oak, a resort community of single-family homes, along with a clubhouse, a Four Seasons hotel, and two golf courses, all located within the bounds of Walt Disney World in Orlando, Florida.
Um.
Juliet Chung of The Wall Street Journal calls this “a risky move.” To my mind, “risky” is an understatement. Consider the facts: Florida’s foreclosure rate ranks among the nation’s highest–and in Orlando, home values have dropped as much as 60%, placing Disney’s pricing for Golden Oaks (between $1.5 and $8 million) at the top. In addition, the project will reportedly take about 8-10 years to complete, and interested buyers are required to put down a deposit of $25,000.
Furthermore, this is Disney we’re talking about here–a multimedia entertainment conglomerate that has worked endlessly to cultivate and preserve a particular image and message for its products. Disney may be about good, clean fun, but that doesn’t mean they’re necessarily flexible. When it comes to Golden Oak, for instance, buyers will be required to hire builders, choose from exterior building material and adhere to architectural styles that it has approved. Granted, these are not meant to be primary residences, and those who actually purchase plots in Golden Oak will no doubt do so because they’re on board with the Disney brand and all the good-natured kitsch that comes with it. Nevertheless, the fact that potential buyers will be building new homes, rather than choosing from existing ones, probably means that there will be a lot of interest in personalization, an interest that will no doubt lead to second thoughts about committing to Golden Oak.
The real question is: can Disney’s park and brand power draw enough interest for Golden Oak to succeed? Ten years ago, I’d certainly say yes. After all, this is actually Disney’s second foray into the residential real estate market, after Celebration (est’d 1994), a master-planned community outside the park grounds. That project actually turned out reasonably well for Disney; still, the company has relinquished control of much of the town, and those aspects it still operates (i.e. utilities) are a source of some conflict among residents. Furthermore, Golden Oak is a luxury community, and as Matt Kelly (vice president of Disney resort real-estate development) himself suggests, “The affluent market is an area where we haven’t offered a lot of product.” While Kelly sees this as an opportunity, I see it as a problem. When the thrills of the Magic Kingdom run out–two weeks, maybe a month into the buyer’s ownership–what amenities or attractions exist right now to justify owning a home in Disney World?
Nevertheless, whatever the challenges, Disney will likely devote a lot of time, effort, and attention to making Golden Oak a success. Perhaps they’ll make it work; perhaps the market will be on an upswing by the time Golden Oak is finished; and perhaps there are factors here that I’m simply not considering.
Whatever the case may be, my advice to prospective buyers: bring your own underwear.
