September 2010

The GCC education sector is on a growth trajectory. The governments in the region display political will and strong intent to create infrastructure and promote innovation. The governments have initiated various policies and regulations to attract higher private sector participation. The GCC countries´ increasing collaboration with foreign universities and institutes to open branches in the GCC region has also significantly impacted efforts to improve higher education. The growing need for quality education and commitment by the governments throws up a number of investment opportunities within this sector. The report highlights that a rising population, coupled with growing number of expatriates, is expected to drive education demand in the GCC region. Raised standard of living in the GCC countries due to increasing urbanisation and rise in income levels have also influenced the attitude of people towards education, leading to improvement in gross enrolment ratios across primary and secondary level in the member countries.

Alpen Capital expects the total students in GCC region to grow at a CAGR of 1.8% during 2010 to 2020 to reach 11.3 million in 2020 from 9.5 million in 2010. Number of tertiary students is expected to grow at a highest CAGR of 5.5%.The share of tertiary education students is expected to rise from 11% in 2010 to 15% in 2020, while primary education share would decline from 46% to 43% during the same period. Private enrolment share is also estimated to rise from 16% in 2010 to 19% in 2020 in primary and secondary education segment.

Increase in student population is expected to drive demand for more schools in the region. Total schools are expected to grow at a CAGR of 1.2% during 2010 to 2020. Alpen Capital expects private schools growth rate to outpace that of public schools. The number of private schools in the region is estimated to increase at a CAGR of 3.2% during 2010 to 2020, while public schools are projected to grow at a significantly lower rate of 0.9% during the same period. The report estimates that by 2020, 6,200 additional schools would be required to meet growing demand.

The report highlights that the requirement for teachers in the Education sector would be around 163,200 by 2020, compared to the 2010 level. As the education participation increases in the region, the tertiary education awareness will increase from 6% in 2010 to 12% in 2020. While 74% demand is expected to be generated from Saudi Arabia, UAE and Oman each account for 11% during the period.

Although the education sector is geared for growth, the report throws light on a few challenges that are likely to be faced by the sector. Currently, the private sector participation is low in education sector. The quality of education still lags behind developed economies, resulting in many students opting to go overseas for higher education. Also, education sector is one of the capital intensive industries with high turnaround time, which acts as a barrier for many investors looking for a quick turnaround. This rising unemployment coupled with preference for government sector job is a challenge for GCC education sector. The GCC countries also lag in absorbing high-skilled labour, thus dis-incentivizing the education attainment levels. However as new government policies are implemented to accelerate the private sector participation and help keep pace with increasing demand in the region, Alpen Capital believes that the GCC education service sector will witness a major transition in the quality of services provided and in competitiveness on the global basis.

For more details please click here to access the complete version of the GCC Education Industry Report.