Fun in Abu Dhabi
For those looking for new thrills, Abu Dhabi's latest tourist attraction may be the answer. Ferrari World, set to open on Wednesday, October 27, is the world's largest indoor theme park and is dedicated to the famous sports-car manufacturer. The park will boast the world's fastest roller coaster, Formula Rossa, which will reach speeds of 150 miles per hour. There will also be a ride, the Fiorano GT Challenge with simultaneously run roller coasters that feature near misses, creating the idea of a duel. On display will be the largest collection of Ferraris outside Italy.
One reason it was decided to locate the park in Abu Dhabi relates to the great enthusiasm among the rich Gulf Arab states for Formula One motor racing. The Abu Dhabi Grand Prix is held each November at the Yas Marina Circuit and is considered one of the most challenging courses in the world and is also extremely spectator friendly. Bahrain has its own Formula One track and Qatar may follow suit. Cars are just the latest example of attractions found throughout the Arab Gulf, Dubai leading the way with its malls, offshore Islands, the Dubai Cup (the world's most valuable horse race), world-class tennis and golf tournaments, and, of course, the world's largest indoor downhill-skiing slope located in a vast air-conditioned mall in central Dubai. Dubai has film festivals and numerous trade-association gatherings, including an annual air show.
Dubai ran into a financial buzz saw following the 2008 financial crisis and the crash of its overblown real-estate market. Nevertheless, throughout the Gulf, prestige projects continue to be built including massive airports, hotels, port facilities and high-class museums, including a branch of the Louvre in Abu Dhabi. The question is, can all these institutions make money? With such intense competition and weather that is only tolerable for three months a year, the challenges are great. To attract people in the nine months of unbearable heat, everything has to be air conditioned at extraordinary costs, which is why electricity demand in the Arab Gulf is among the highest in the world.
Two factors give hope that some of these projects will be successful. First, the growing Asian tourist market and a continued stream of Russians and Europeans who seem to like going to the Gulf, even in the hot weather. And second, geography. The Gulf is uniquely located, being within four hours flight of a population catchment of two billion people. Furthermore, if you have to change planes between Europe, North America and Asia, it is much more pleasant to do so in Dubai or Abu Dhabi or Bahrain than going through the misery of JFK, Heathrow, Paris de Gaulle, or Frankfurt.
The success of Emirates Air, which is operated out of Dubai, shows that with high volume and high-luxury aircraft such as the Airbus 380, it is possible to make a profit. But whether the other expanding Gulf airlines can all make profits is doubtful. There are other downsides to consider. The most serious is that the rich Gulf states lie in the center of one of the most dangerous regions in the world. Their economies are dependent upon foreign labor, mainly from Asia, and without the U.S. military presence, they would have no protection from their larger, more predatory neighbors. The small Gulf states run very tight security against terrorists, and so far there have been no major terrorist incidents, but if there were a serious attack in Dubai or Doha, it could have a profound effect on future financial investment in all the super rich states.
Abu Dhabi and Doha may be the most viable cities from an economic standpoint. The former controls the world's largest sovereign-wealth fund valued at over $600 billion. The latter controls huge natural-gas reserves and has the world's third-highest per capita income. But as Saddam Hussein so brutally demonstrated in August 1990, rich little Kuwait was overrun and trashed by Iraqi tanks in a matter of hours.