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Education infrastructure worth billions in the pipeline across GCC
May 6, 2017, 3:11 pm

A new report shows that over US$50 billion is being invested in more than 500 educational projects in the public and private education sectors across the Gulf Cooperation Council (GCC) states.

In its ‘2016 GCC Education Report’, Alpen Capital, a leading financial advisory firm in the region,  notes that the education sector in the six-nation GCC bloc is witnessing a robust growth in student enrolments and a steady expansion in related infrastructure.

The firm expects an expanding base of school and college age population and increase in the Gross Enrollment Ratio (GER) across the education segments to drive growth in this sector. The GER shows the total students enrolled at a particular education level as a percentage of the total eligible official school age population that corresponds to the same level of education in a given school year.

In its five-year projection for the GCC education sector until 2020, Alpen Capital says that total number of students will reach 15 million in 2020, registering a Compound Annual Growth Rate (CAGR) of 3.6 percent from an estimated 12.6 million in 2015.

Meanwhile, the demand for schools in the GCC region is likely to increase at a 3.0 percent CAGR from an estimated 43,903 in 2015 to 50,978 in 2020. This signifies requirement of more than 7,000 schools in the next five years, most of which are anticipated to come up in Saudi Arabia.

The Kingdom will also continue to dominate the GCC education market in student strength, with the number of students growing at an annualized rate of 3.5 percent, from 9.2 million in 2015 to 11 million by 2020. However, in terms of annualized growth during 2015 to 2020, the number of students in Oman, Qatar, and the UAE are projected to grow faster than the other member nations.

Government spending in the education sector is also expected to keep pace with the growth in student ratios. In 2016, the average government spending by the six-nation bloc on education as a percentage of total budget expenditure was 15.6 percent, with the highest being in Saudi Arabia at 22.8 percent. This was followed by the UAE (21.2%), Oman (21%), Qatar (10%), Kuwait (9.5%) and Bahrain (8.8%).

With falling oil revenues limiting government spending on education, the authorities are encouraging greater private sector investments in this segment. Also, the rise in disposable income among GCC citizens, and an increasing preference for international curricula for their children, is fueling a rapid growth of private educational institutions in the region, including several renowned Western scholastic establishments that have opened branches in the GCC.

The report highlights that during the forecast five-year period the number of students at private schools is projected to grow at a 5.1 percent CAGR from 2015, while enrolments at public schools are anticipated to increase at an annual average of 2.6 percent. In line with this, the demand for public schools in the GCC is expected to increase at an annual average of 2.6 percent, while that for the private schools is anticipated to rise at a faster rate of 5.4 percent during the forecast period.

The report shows that with the world’s largest international school market, the UAE is to add more than 200 schools and 300,000 students by 2020. In Dubai, which aspires to become the ‘knowledge capital’ of the region, the government is also taking several proactive steps aimed at  encouraging investments in the education sector and promoting the building of more quality schools. This in turn is increasing competition and forcing education providers to offer better quality and value for money.

Commenting on this increased competition, Dr. Pablo Fetter, the CEO of Kings' Education in the UAE, noted, “With the opening of between 17 to 22 new schools in 2016, and a similar number projected for next year, parents will have a greater number of quality options going forward. This increased competition will lead to a ‘flight to quality’, with operators that demonstrate a greater focus on quality becoming the winners, and marginal players getting further marginalized.”

This view was reiterated by Clive Pierrepont, the director of communications at Taaleem, one of the largest education providers in the UAE. Pointing to some of the specific challenges faced by the sector, he said they included “recruiting quality staff, retaining students, preserving reputation and quality underpinned by regulatory ratings, and having to balance costs with a fee income that is highly regulated”.

Given the dynamic and transient nature of much of the population, education as a service remains dependent on the wider economy and the unique demographics of the GCC. As more families move to the region for economic reasons, they need to be reassured about the quality of schools available to them. But many private school owners are reluctant to invest in education infrastructure, given government policies and nationalization drives that detract foreigners from making long-term plans on staying in the region.


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