Due to demographics, increased purchasing power and generous government regulation, the MENA region has become a blooming market for private education providers and investors.

According to Dubai-based investment bank Alpen Capital in its July report the total number of students in the region is forecast to reach 13.7 million by 2020 with enrollments at private providers expected to grow 6.7% in that time. That said operators and investors should not expect returns at the same time frame as in other industries because education is a very specific business. Education is a hands-on business and customer acquisition periods are limited mostly to just the beginning of the school year and limited hiring cycles for teachers also affect the sector’s liquidity.

However, with that in mind, private education in the Middle East has been very profitable for the past few years. The potential pool of quality teaching talent is nevertheless a threat to the sector because great teachers are a diminishing resource. As a result, the cost related to attracting the best of teachers is increasing. Alpen Captial’s GCC Education Industry Report released in July underlines on the other hand that intrinsic factors including demographics will maintain the region’s momentum while vocational and online education are emerging sectors to watch. Enrollments in the MENA region will continue to be dominated by primary and secondary segments, specifically in international schools, but market share is expect to decrease slightly from 79% of enrollments to 76% in 2020.

The UAE is will stay the most mature market in the region, led by Dubai’s rise as an academic hub. Saudi Arabia, Qatar, Oman and Egypt are also attracting attention. Both investors and operators are now beginning to look at less developed markets in Turkey, Morocco and Algeria where demand is increasing for quality education but there is less saturation from foreign players.

Mehdi Lazar, Ph.D.