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, said a Boston Consulting Group (BCG) report entitled ‘Where to Invest Now in the GCC Private Education.’
Saudi Arabia’s private K-12 education market valued at $5 billion in 2017 is poised to grow to $12 billion by 2023, according to BCG.
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, it said.
It found four drivers of growth in private education:
1- The 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.
2- Tuition Fees
Across the GCC region, tuition fees for private education will continue to rise 2% to 4% per year.
Expatriates are also facing increased financial pressure as employers have begun to scale back their tuition-reimbursement packages.
3– Population Growth
The student-aged population (age 3 to 17) is expected to grow at a Compound Annual Growth Rate (CAGR) of 1% to 3%.
The expatriate population is expected to grow even faster than national populations, and expatriates attend private schools.
4- 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 most significant overall population in the GCC, and the lowest kindergarten enrolment rate (less than 20% kindergarten enrolment in Saudi Arabia versus 60% to 90% in the rest of the GCC).
As the potential for growth in the private education market varies significantly from country to country, it is crucial 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.
Saudi Arabia’s private schools are the majority of growth in the region.
The private K-12 education market is poised to more than double over the next five years.
This growth will be fuelled by several factors including a shift towards private schools, expatriate population growth, enrolment growth and tuition increases.
The number of students in private schools is estimated to increase from 18% in 2017 to 30% by 2023.
Additionally, Saudi nationals are now allowed to enroll in private international schools, and the country is allowing 100% foreign ownership of companies in the education sector.
Moreover, as the expatriate population in the Kingdom continues to grow, families are more likely to enroll their children in quality private schools.