Saudi private school sector needs 214,000 new seats

The demand in the K-12 education sector is attributed to the rapid population growth and government-led initiatives to attract global talent 

Riyadh, Dec 4, 2023: Saudi Arabia will need to add around 214,000 seats in private schools by 2035, according to a recent study published by property consultancy Knight Frank. 

According to the report titled ‘K-12 Education in the Kingdom of Saudi Arabia,’ the demand in the K-12 education sector is due to the rapid population growth and the government’s initiatives to attract global talent to the country. 

The survey underscores a substantial demand for K-12 education in Saudi Arabia. Of the estimated 214,000 additional student seats required in the private school sector in the country, Riyadh alone will need more than 63,500 seats and Jeddah requires 42,600. Notably, private schools offering international curricula have experienced remarkable growth, with a significant 24.4% increase observed from 2018 to 2022. 

Saudi Arabia’s school-going population has surpassed the GCC school-aged population by almost threefold, according to the report.   

Moreover, the Early Years segment is experiencing a surge in popularity, fuelled by the increasing participation of females in the workforce and government-driven enhancements in early childhood education to boost outreach and enrolment. Additionally, the Special Education Needs (SEN) segment presents a unique opportunity, as there exists a gap in providing structured and comprehensive solutions for SEN students, creating space for international providers to make a meaningful impact. 

Addressing the market gap and segments, Shehzad Jamal, Partner and Head of Strategy & Consultancy, MEA says, “Across the education sector, there exists a demand spanning all segments. The mid to upper mid-tier schools providing quality education will benefit from sustainable demand from a wider target population segment, which results in sustainable long-term growth. The rising demand for quality private education has been escalated by increasing awareness, disposable incomes and an influx of top-tier talent to the country.  

In 2022, the fiscal budget earmarked a staggering $52 billion for education, consistently ranking among the top three areas of public sector expenditure. As part of the National Transformation Programme, an additional $7 billion has been allocated for schools and education facilities, with completion expected by 2030.”  

In the recent survey, 54% of respondents expressed a strong preference for private schools, particularly among younger Saudis and individuals with higher incomes. 

Examining the factors of supply and demand, Salman Khan, Senior Manager, StratCon – Education says, “While the education sector in the Kingdom has consistently grown in the past, we now witness unprecedented demand due to several factors including Saudi Arabia’s transformation into a regional commercial hub backed by ambitious development projects that are attracting top talent to the Kingdom, necessitating high-quality educational facilities.  

Government initiatives aim to elevate standards and transition from direct providers to regulators. Considering expected population growth and an increasing preference towards private schools, it is estimated that more than 200,000 additional private school seats would be required in Saudi leading up to 2035, with more than half of these seats required in key cities of Riyadh and Jeddah only. These estimates are based on organic population growth. If we consider the government’s ambitious growth plan for Riyadh that entails a minimum population target of 15 million by 2030, estimates of incremental demand soar to nearly five times the base case estimate for the capital.”  

Focusing on curriculum preferences, 25% of respondents favoured a dual curriculum (MoE and American), followed by the American curriculum at 18%, followed closely by British and local (MoE) curriculum at 16%. 

This presents an opportunity for investors to leverage the expertise of international education service providers to establish international branch campuses in the country. Alternatively, collaborating with regional operators in the form of joint ventures and management agreements also serves as a viable avenue for expansion. Real estate prospects include land acquisition and development of purpose-built properties for long-term leasing and generating steady returns. 

However, investors and operators are observed to face several challenges, including limited access to land and rising land prices. Development costs are increasing, driven by rising construction costs and supplier bargaining power amid the boom in construction activity across Saudi.  

Commenting on specific challenges, Khan explains, “As we examine the challenges, it’s important to acknowledge that the perceived high tuition fees at private schools can indeed pose a hurdle when it comes to ensuring accessibility and attracting demand within the private education sector. Attracting and retaining skilled staff can also be challenging, which may intensify further with increasing competition as more schools enter the market. Additionally, the burden of rising cost of living, especially in tier 1 cities, exerts adverse pressure on staff expenditures.

Echoing on the above parent preferences, Jamal says, “In our recent survey, which involved more than 1,000 households in the Kingdom, 54% of the respondents demonstrated a distinct preference for enrolling their children in private schools. What’s particularly intriguing is the pronounced inclination of younger Saudis, many of whom likely hold degrees from international universities, towards private education for their children. Among those under 25 years of age, a significant 58% favour private schooling over public institutions, while the preference slightly decreases to 49% among individuals aged over 45. 

We have also observed that respondents with higher incomes tend to gravitate towards private schools. A notable 66% of those earning over SAR20,000 monthly express a clear preference for private education for their children, in contrast to less than half (49%) among those earning below SAR20,000 per month.”  

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