The document discusses the growing family entertainment center (FEC) market in the Middle East. It notes there are various types of FECs focused on activities like gaming, education, sports, and thrill rides. The Middle East has favorable demand drivers for FECs like a growing population, including many young people, an increase in tourism and malls. "Edutainment" FECs focused on educational role-playing, like KidZania, have potential for growth in the region. While FEC supply is increasing, demand is expected to continue growing, with the largest opportunities in Saudi Arabia and Egypt. Major real estate developers dominate the FEC market in the Middle East.
2. PwC
March 2017
Family Entertainment Centres (FECs) have been gaining in popularity in the
Middle East, with many new types emerging
2
The Family Attraction Opportunity in the Middle East •
Entertainment GamingEdutainment Sports
FECs centred around leisure
activities and thrill rides
FECs that offer leisure
activities with educational
benefits
FECs centred around arcade
games and targeting a wide
demographic
FECs offering activities and
games that are physically
engaging
Source: PwC analysis
Types of FECs by offering
3. PwC
March 2017
The Middle East has several favourable demand drivers for FECs…
3
The Family Attraction Opportunity in the Middle East •
Growing Mall
supply
Increased
Leisure Tourists
Growing Resident
Population
• +225 m residents as of 2015, forecast to grow at c.3% p.a.
by 2025
• Predominantly young (c.30% of the population in KSA
and Egypt is below the age of 15)
• +60 m inbound tourist arrivals as of 2015, forecast to grow
at c.6% p.a. by 2025
• +19 m tourists to the UAE, 75% of which are for
leisure
• +150 mn sq.ft of gross leasable area as of 2015
• Gross leasable area is expected to increase by 36% between
2016-2019
• c.50% of mall supply in the UAE (+120 malls)
Note: Figures include Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen
Source: PwC analysis
4. PwC
March 2017
UAE and Qatar have the largest attractions pipeline in the near
future
4
The Family Attraction Opportunity in the Middle East •
EGYPT
Announced upcoming FECs
UAE
Ain Dubai
Saudi Arabia
Qatar
Jordan
Egypt
Source: Press articles
5. PwC
March 2017
In terms of positioning, there is room for “edutainment-focused”
FECs such as Kidzania and KidzMondo…
5
The Family Attraction Opportunity in the Middle East •
Size
(Thousandsqft)
80
50
10
Focus on
role-play
FECs in the MENA region based on focus & size*
Edutainment Focus
Low High
Source: PwC Analysis, Company websites
*Note: List indicative and non-exhaustive
SmallLarge
6. PwC
March 2017
The Edutainment concept offers a premium differentiated
experience
6
The Family Attraction Opportunity in the Middle East •
Entrance
KidMondo Doho
Roleplaying as surgeons
KidZania Singapore
Roleplaying activities
KidZania London
Entrance
LDC Toronto
Kids play area
LDC Manchester
Average
outlet size 2.5k – 7.5k sqm
Average
dwell time 2 – 4 hours
No. visits per
outlet
300k – 600k
c.65% of visits are from children
Target age
group 2-12 years
Average
CAPEX
$25m - $35m per outlet
Sponsors pay up to 40% of initial cost
Location
Generally connected to large
shopping malls
Key facts:
Payback
period
4-7 years
Operates at 20-40% margin
7. PwC
March 2017
Edutainment concepts enjoys high footfall
7
The Family Attraction Opportunity in the Middle East •
500
180 160 130
60
45 46
50
800
600
1,000
20
00
60
80
100
40400
200
100
Visits per sqm
Visits per outlet
Averagevisitsper
outletin,000
Visitspersqm
Annual visits to select FECs in the UAE, 2016
Source: PwC Analysis, Company websites, New articles
8. PwC
March 2017
Demand for FECs is expected to continue to outstrip the upcoming
supply…
8
The Family Attraction Opportunity in the Middle East •
*Based on market benchmarks and assuming 250k visits per outlet per year, and c.4.7x average visits per person per year to paid FECs
Source: PwC analysis
UAE
30%
Qatar
2%
Eqypt
8%
Oman
5%
Jordan
5%
KSA
50%
Qatar
3%
Jordan
7%
Eqypt
36%
Oman
5%
KSA
38%
UAE
12%
2015
c.30 mn
visits
+350
outlets
Existing visits to FECs
2020
Potential demand to FECs
Opportunity for:
c.126 mn
visits
130-140 outlets
9. PwC
March 2017
…with KSA and Egypt providing the largest opportunities
9
The Family Attraction Opportunity in the Middle East •
*Based on an average visits per outlet of 250k per year
Source: PwC analysis
+350
Total 2020 supply-
demand gap by number
of new outlets*
EGYPT
SAUDI
ARABIA
JORDAN
QATAR
Oman
UAE
Focus countries
(Amman, Irbid)
(Alexandria,
Cairo)
(Riyadh, Makkah,
Madinah,Eastern Province,
Tabouk)
(Muscat, Batinah,
Sharqiyah)
+145
+5
+140
+20
+25
+15
Supply-demand gap by number of new outlets,
2020
10. PwC
March 2017
Five regional real estate developers dominate the FEC market across the
Middle East given their ability to leverage their mall portfolio
10
The Family Attraction Opportunity in the Middle East •
Source: FECs websites and annual reports, PwC analysis
*List non-exhaustive
Meraas / Dubai
Parks
Miral / Farah
Experiences
Emaar
Entertainment
Al Hokair Group
Majid Al Futtaim
(MAF Leisure)
8 locations in
the UAE
11. PwC
March 2017
Critical success factors
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The Family Attraction Opportunity in the Middle East •
Strong IP
Experienced operators
Partnership with other facilities and DMCs
Strong social media presence
Strategic location (e.g. high footfall malls)
Long dwell time
Multi-activity sports-focused FECs have been gaining popularity and target a wide demographic base.
Potential demand for FECs is primarily from residents, with the only sizeable demand from tourists being in the UAE (~25%). FECs tend to capture up to 10% of a mall’s footfall (varies by mall size). The most successful FECs in the UAE (Kidzania and Sega Republic) are in the largest and most successful mall (Dubai Mall).
KSA has the largest opportunity for new FEC development driven by population size and demographics (~ 30% of the population <15 years)
