Gulf Theme Parks Face Bumpy Ride
BMI View: A huge growth in interest in theme park builds supports our bullish outlook for the Gulf region's construction industry. As burgeoning oil receipts gradually become teemed with improvements in the credit environment, an expanding consumer base will fuel incremental growth in demand for leisure and tourism. In turn, these industries are being fostered by governments looking to diversify away from a reliance on hydrocarbons. Although we believe that these mega-projects will impact upon construction industry fortunes, we highlight the significant risks to the completion of such projects. As such, we refrain from factoring in a significant amount of projected activity to our overall construction forecast.
|Bahrain||Lost Paradise of Dilmun||US$50mn||77,000 sq m||al-Areen||Open|
|Bahrain||Water Garden||US$10-15mn||65,689 sq m|
|Iraq||The Baghdad Zoo & Entertainment Experience'||US$500m||Ride & Show Engineering||Planning stage|
|Jordan||Red Sea Astrarium||US$1.5bn||184 acres||March 2012 - 2014|
|Kuwait||The 99 Theme Park||Teshkeel Group||Plans to expand franchise|
|Qatar||Unnamed||Barwa Real Estate||Design Stage|
|Qatar||Aqua Park Qatar||100,000 sq m||Open, further phases being developed|
|Qatar||Six Flags||US$275mn||Six Flags, Oryx Holdings||Postponed|
|Saudi Arabia||Safari Land||10,963 sq m||Al Othaim|
|UAE||Ferrari World||86,000 sq m|
|UAE||Dubai Land (City of Arabia, Legoland, Falcon City of Wonders, Mall of Arabia, Universal Studios etc.)||US$64bn||278km sq||IMG Group, Marvel Entertainments. Previous plans involved Universal Studios, Sea World, DreamWorks, Six Flags, and Legoland.||US$5bn funding secured for City of Arabia, other projects on hold.|
|UAE||Wild Wadi Water Park||Jumeirah||Open|
|UAE||Yas Waterworld||US$165mn||Aldar||Opening end of 2012|
|UAE||Real Madrid Resort Island||500,000 sq m||RAK Marjan Island Football||- Jan 2015|
|UAE||Dubai Adventure Studios||US$598mn||74 hectares||Merass||2012 - 2014|
|UAE||Adventure World Abu Dhabi||US$900mn||80 hectares||2012 - 2014|
We have long observed that the leisure and tourism industry is playing an increasingly important role in the economies of many Arab states. In an effort to diversify away from a reliance on the oil sector, the UAE, Qatar and Saudi Arabia have begun to garner increasing receipts from holiday makers. This trend has been especially pronounced in light of disruptions occurring across the rest of the region, following the Arab Spring. This growth is being abetted in the long term by large-scale airport development programmes and urban infrastructure works necessary to connect complexes to major towns.
Although we believe that regional growth will provide a boon to firms looking to build hotels, restaurants and urban infrastructure, we highlight the exceptionally large risks in factoring theme park projects into our construction industry forecast, and remain reluctant to do so until a tangible progress is evident. Although the MENA region has potential to support a number of parks both financially and demographically, we highlight the hazards of over-investment and over-capacity ( s ee BMI ' s online service, July 4 2012, Mega Projects Sustain Qatari Outperformance, and, July 31 2012, Commitment To Construction Buoys Forecast).
Reflecting a general improvement in the UAE's construction industry ( s ee BMI ' s online service, July 4 2012, Hospitality Boom Keeps The Emirates Building), IMG Group finally secured US$5bn funding for their Disney-Marvel themed build within the City of Arabia project. However, this is a relatively minor development considering that, before the 2008 collapse, Dubailand had secured agreements with a number of global majors: 13 parks had been planned for the complex at a projected cost running into tens of billions of dollars.
With this in mind, we question the emirates' ability to absorb the extremely large number of builds that are once again being tabled. We believe that over the long term, the contribution of theme park builds will be significant, yet will be nowhere near matching the figures suggested before 2008. Poor ticket sales at Ferrari World Dubai, whom Aldar were forced to sell to the government after twice being bailed out, suggests the pitfalls that face projects even after construction is achieved.
However, we highlight that, in the long term, a renewed commitment to theme park builds in the MENA and East Asian regions will prove a boon to US firms struggling to stay afloat in traditional markets that have slowed with a fall in consumer spending. Six Flags Entertainment Corp., which controls 19 attractions in North America, filed for bankruptcy protection in 2009, citing heavy debt. In Europe, the industry has slowed dramatically, with larger players relying on acquisitions and renovations to stay afloat.