Just a couple of hours after the Chinese government approved the Shanghai Disneyland project, a nearby parcel of land was snapped up for a whopping 1.19 billion yuan by a little-known Xiamen-based property developer at an auction in the city yesterday.

The plot, situated just 3.3 km away from the proposed Disneyland site, occupies an area of 56,570 sq m.

A total of 15 bidders, including Poly Real Estate Group and Shanghai Jielong Group, took part in the auction, but a State-owned company from Fujian province, Xiangyu Real Estate Co Ltd, offered the highest amount, which was 264 percent more than its reserve price of 362.8 million yuan.

"The price is beyond our reach. It's hard to imagine that the bid was so high," said a Jielong executive after the auction.

Analysts estimated its gross floor area price at more than 14,000 yuan per sq m, and, including other establishment fees, the final sale price may be as high as 19,000 yuan.

This piece of land is located in Chuansha, Pudong New Area, where limited supply and the Disney concept have pushed up land prices. Chuansha's home rates have rocketed from 3,000 yuan to 12,000 yuan per sq m in less than three years, and in the same period, land prices have gone up by almost 10 times, property information provider DTZ said.

"Apparently, the auction has pushed local housing prices to a new level. In order to support the high housing prices, there should be adequate infrastructure within the next few years. Otherwise, the market may turn a cold shoulder to the remote housing project," said Hingyin Lee, director of research & advisory at Colliers International's East China division.

Xue Jianxiong, an analyst with E-House (China) Holdings Ltd, said the single plot might not affect the whole area's housing prices much. "The gross floor area after construction is estimated at 84,855 sq m according to the plan, which is only for a medium-sized community. Even if the regional housing prices surge a bit in the short term, the bubble will burst soon," Xue noted.