All segments of the GCC education sector is poised for consistent growth driven by rising focus on quality education, increasing population, increased private sector participation and strategic plans of governments, said an expert.

“Despite the challenges that private providers face in terms of high initial investment and running costs, the education sector remains an attractive investment opportunity across the region,” added Sameena Ahmad, managing director at Alpen Capital, a provider of a full range of investment banking advisory services.

“The GCC governments realize that education is a pivotal pillar in the development of any nation and have undertaken several initiatives to enhance the quality and reach of education,” said Sanjay Vig, managing director at Alpen Capital.

“It is therefore no surprise that the sector has attracted a number of private investors in the last decade. Although the private school market across the GCC is highly fragmented, it still offers significant opportunities for new investments and ample room for consolidation for existing players.”

Industry outlook

Alpen Capital in its GCC Education industry report expects the total number of students in the GCC region to grow from an estimated 10.2 million in 2011 to 11.6 million in 2016, registering a CAGR of 2.7 per cent.

Growth in the total number of students in the pre-primary and tertiary segments is expected to outpace the growth rate of primary and secondary segment. The pre-primary segment will see a growth rate of 11.2 per cent, followed by tertiary segment at 4.8 per cent, primary segment at 1.7 per cent and secondary segment at 1.6 per cent.

Total enrolment in pre-primary, primary and secondary education segments in private schools will grow at a CAGR of 10.2 per cent. Growth in the total students in the region is primarily attributed to the increasing population in the region.

The share of students in the pre-primary segment is expected to increase from 5.3 per cent in 2011 to 7.9 per cent in 2016, while the share of tertiary students is expected to rise from 12.0 per cent to 13.4 per cent during the same period. This is due to the fact that these segments are currently under-penetrated and expected to grow at a relatively faster pace.

The share of students in private schools is expected to grow from 21.1 per cent in 2011 to 30.4 per cent in 2016, the report said.

Private school enrolment in Saudi Arabia is expected to grow the most in the region, at a CAGR of 16.6 per cent between 2011 and 2016, followed by Qatar at 6.0 per cent and Bahrain at 5.9 per cent.

According to the study, recent regulatory changes, which allow Saudi nationals to enroll in international schools will boost overall enrolments in private schools in Bahrain.

Higher demand for education will also propel growth in the number of schools in the region. By 2016, the region is likely to have a total of 51,450 schools; out of which 20.6 per cent will be private schools.

Alpen Capital also foresees that the number of higher educational institutes across the GCC region will rise mainly on the back of rising enrolment rates in the GCC member countries.

Growth drivers

An increasing population base coupled with an expanding expatriate population is expected to drive demand for education across the region.

Increasing income levels and growing awareness about education are also expected to drive demand for private education despite it involving higher costs. This trend is also expected to translate into more private sector investment in the region and is likely to further improve the quality of education in the GCC member countries.

Trends

Private schools earlier catered primarily to expatriates but there is a growing interest in private education amongst GCC nationals, as a result of which, an increasing number of them are shifting to private education for their children.

Governments of GCC member nations have encouraged the entry of foreign universities in the region to improve the quality of higher education in the region. As a result there are several higher education options available in the region which is not only encouraging expatriate children to consider higher education in the GCC but also attracting students from the greater Mena region.

Challenges

Shortage of skilled teachers continues to be major challenge for the GCC education sector. Apart from a shortage of skilled teachers, the region is also facing the problem of high attrition rate among teachers as the experienced ones easily get a chance to switch schools due to a demand-supply gap that is prevalent in the market. – TradeArabia News Service