Alpen Capital report: GCC aims to spend $150 billion on education Education

A new study shows, annual 3% growth rate in the number of students in the GCC region is expected between 2013 and 2020 to reach 13.7 million.

The GCC is poised to experience a recurring spend of $150 billion in its education sector over the next few years, according to the Alpen Capital report.

Due to the increasing demand of both locals and foreigners, the total number of schools in the region is likely to emerge at a compound annual growth rate (CAGR) of 2.4 per cent from 2013 to 2020.

According to Mahboob Murshed, managing director, Alpen Capital - The education sector is developing at a very rapid pace in the region and thus providing opportunities for private investors. The M&A activity has picked up in the sector in recent times. Private players, both local and international, are drawn to segments such as the K-12 and higher education recently, which are the largest sector within the sector, In addition the new and promising industry specific, niche sectors such as vocational training, child-skill enhancement, finishing schools, and e-learning are also getting investor attention due to their increasing demand.

The UAE is the most developed education market in the region while Saudi Arabia is the largest market in the region, accounting for more than 75 per cent of the gross enrollment within the GCC, the report found.

Alpen Capital also noted a growing demand for private schools offering international curriculum in the region.

The setting up of private schools in the region has been driven by the increasing expatriate. Anticipating the capacity, various international schools are setting up their branches or are entering into partnerships with the present private institutions in the region.

However, the sector also faces a number of challenges such as the less number of skilled teachers and regulation of fees that hinder the growth of the education industry in the long span.

Establishing a private school in the region is capital intensive, as a result of the growing real estate prices, electricity expenditure, licensing costs, salaries and visa expenses. Additional education projects include a long gestation duration. Restrictions such as cap on the fee structure also make it confronting for investors to gauge the investment opportunity.

Despite such confrontations, private school operators have been cashing in on the boom in the education market mainly bought about by the population growth. Dubai-based school operator GEMS Education disclosed plans earlier this year to construct almost six schools and targeted to create around 10,000 new school places a year.