Sunday 25 October 2020

Dr Leila Hoteit

Bahrain’s private K-12 education market to hit $700m

MANAMA, May 15, 2018

Bahrain’s private K-12 education market valued at $0.4 billion in 2017 is poised to grow to $700 million by 2023, according to a new report by global management consultancy Boston Consulting Group (BCG).

 Across the GCC, the private education market is becoming a magnet for investors, and rightly so, as it is expected to double over the next five years, added the report titled “Where to Invest Now in the GCC Private Education”.

 Despite the fact that strong growth has been predicted across the region, investors must fine-tune their strategies to account for the shifting circumstances before committing to an investment opportunity.

The report identified four drivers of growth in private education, affecting markets across the GCC:

Shift towards private schools: At $11,000 per student per annum, private school spending is higher in the GCC region than in OECD counterparts. Parents across the region are becoming increasingly willing to pay for private schools that provide differentiated offerings and improved outcomes—and this trend will likely grow now that governments are beginning to publish performance ratings for all schools.

Tuition fees: Across the GCC region, tuition fees for private education will continue to rise 2 per cent to 4 per cent per year. However, tuition fees are rising at a slower rate than in recent years owing to tighter regulations and an economic environment that limits consumer spending. Expatriates are also facing increased financial pressure as employers have begun to scale back their tuition-reimbursement packages. Some governments have placed caps on tuition hikes: in recent years, Kuwait has limited tuition hikes by 0 per cent to 3 per cent, and the UAE and Bahrain recently set a limit of 5 per cent, linked to the education inflation index and schools’ performance.

Population growth: The student-aged population (age 3 to 17) is expected to grow at a Compound Annual Growth Rate (CAGR) of 1 per cent to 3 per cent. The expatriate population is expected to grow even faster than national populations, and expatriates attend private schools.

Enrolment growth: Private school enrolment at the primary level and above is high throughout the GCC and expected to remain steady. Enrolment rates at the preschool level (ages 3 to 6) are growing, most notably in Saudi Arabia, which has the largest overall population in the GCC region and the lowest kindergarten enrolment rate (less than 20 per cent kindergarten enrolment in Saudi Arabia versus 60 per cent to 90 per cent in the rest of the GCC).

“New developments, such as evolving demographics, government interventions, and regulatory issues, are reshaping the complex private education market within each country in the GCC. As the potential for growth in the private education market varies significantly from country to country, it is important for investors to understand the size of each market and its potential for growth in the coming years,” said Dr Leila Hoteit, partner and managing director at The Boston Consulting Group.

Bahrain’s private school market is smaller than other GCC markets, given its smaller population, but it has the potential to grow from $0.4 billion in 2015 to $0.7 billion in 2023. Three key factors are driving this growth; these include a shift towards private schools, tuition increases and new enrolment opportunities.

The expatriate population is growing, Bahrainis are increasingly interested in private schools, and the government is offering incentives to attract private and foreign investment. Bahraini schools have better outcomes than many other GCC countries, which has created an opportunity to attract students from Saudi Arabia’s Eastern Province. In addition to this, tuition fees will continue to grow at approximately 3 per cent per year.

It can be challenging for private schools to navigate the regulatory environment and compete against public schools. The Bahrain Quality Authority classifies 30 per cent of public schools as “outstanding,” whereas only 18 per cent of private schools have achieved this classification. With public schools continuing to improve, and a sluggish economy that has reduced consumer spending, Bahraini nationals may be less willing to pay for private schools.

“The private education market has become increasingly complex and competitive in recent years, particularly in mature markets such as the UAE—and these shifts have implications for investors,” said Maya El Hachem, principal at The Boston Consulting Group.

“Bahrain is a highly fragmented market, with no large-scale operators. There is a need for high-quality private international schools with low- to mid-range fees. By encouraging healthy competition, the country can benefit from its investor-friendly environment with fewer barriers to entry than the rest of the GCC region.” – TradeArabia News Service

Tags: Bahrain | private education | K-12 |

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