Martin Freeman in the central role of Bilbo Baggins in The Hobbit: An Unexpected Journey.

Wellington, dubbed the “Coolest little capital in the world” by the Lonely Planet guide book last year, is set to lose its cool to Hobbit mania next month.

The countdown to the world premiere of The Hobbit: An Unexpected Journey on November 28 is under way with predictions that it could be even bigger for the city than the last JRR Tolkien blockbuster opening in 2003.

Then, more than 100,000 people - close to a third of the region's total population - crammed into Wellington's entertainment strip Courtenay Place to see the stars arrive for the premiere of The Lord of the Rings: Return of the King.

A motorcade through the city honoured local director Peter Jackson, who went on to receive a knighthood for his Oscar-winning Rings trilogy. He is now tipped to see his three planned Hobbit films add another fortune to the millions of dollars the Tolkien fantasies made for him.

Even Wellington mayor Celia Wade-Brown, a down-to-earth Green who eschews a limousine in favour of riding a bicycle round the city, showed signs of Hobbit fever when she kicked up her heels for the cameras on a sample of the 500-metre red carpet to be laid in front of the Embassy Theatre.

She declared that the city would officially be named “The Middle of Middle-Earth” for one week in conjunction with the premiere and the council is spending 1.1 million New Zealand dollars (900,000 US dollars) of residents' tax money on the occasion.

The council is funding big screens in the nearby harbourside Waitangi Park to show the red carpet parade to overflow crowds who cannot get into Courtenay Place. In the nights leading up to the premiere, there will be free screenings of The Lord of the Rings trilogy.

The city's airport is also adopting “The Middle of Middle-Earth” tag in preparation for the arrival of stars, including Ian McKellen, reprising his Rings role as Gandalf the Grey and Martin Freeman in the central role of Bilbo Baggins.

The Customs Service is considering a special Middle-Earth passport stamp.

New Zealand Post hopes to repeat the success of its Lord of the Rings special stamps issue - which it said was “far and away the biggest we have ever produced” - with six featuring Hobbit characters, as well as a set of gold and silver commemorative coins.

Some have questioned the propriety of the city council spending more than a million dollars on the premiere, especially as it would be pocket money to Jackson.

“The council's business is not running social events for the few,” says businessman Simon Carlaw, who confesses, “I have never been anywhere near the Tolkien movies or the books.” But he appears to be in a minority.

The Hobbit has been controversial since the New Zealand government bowed to Hollywood demands two years ago and agreed to pay an extra 25 million US dollars in tax breaks on top of its basic 15 percent subsidy to ensure the two movies Jackson planned - since increased to three - were made in the country.

As details of the coming premiere were announced, New Zealand Prime Minister John Key made a surprise trip to Hollywood to try to persuade the studios to make more movies in New Zealand. He was non-committal about pressure they put on him to raise the basic subsidy for foreign filmmakers amid speculation that neighbouring Australia is considering lifting its rebate to 30 percent.

Hollywood director James Cameron, who has bought land in New Zealand and is talking about making two sequels to his blockbuster Avatar here, says the subsidies are well worth it.

He told a television interviewer that Jackson has created in Wellington “a global industry that's competing directly with what's happening in Los Angeles or London.

“If some accommodations need to be made to foster that, I think the benefits to the New Zealand economy will far outweigh, you know, any potential deficit.” - Sapa-dpa