Saudi higher education needs 900,000 new seats

13 January 2023
Opening the education sector to foreign private financing creates new market opportunities for investors, developers and operators


Saudi Arabia will need to add around 900,000 seats in the higher education sector by 2030, according to a recent study published by Colliers, a Canada-based diversified professional services and Investment management company.

“That calls for an investment of $36bn to $54bn by 2030,” says Mansoor Ahmed (pictured right), Colliers executive director Middle East and Africa, in an interview with MEED. 

The firm estimates that the average cost to establish one seat in the region, including construction and equipment, ranges from $40,000 to $60,000.

The Middle East and North Africa's (Mena's) biggest market is going through fundamental structural transformations following the rollout of the Vision 2030 initiative. The economic diversification to shift away from dependence on oil and the Saudisation drive will spur demand for higher education in the kingdom. 

Increasing incomes and demographics are also fuelling demand.

“The Saudi population should increase from an estimated 36.8 million in 2022 to 45 million by 2030,” says the Colliers director.

Similar to other GCC countries, Saudi Arabia has a young population profile. At the end of 2022, out of 36.8 million people, 3.8 million (10.3 per cent) were aged between 18-24 years. 

The figures should increase to 7.1 million (15.7 per cent) by 2030, according to Colliers. The total demand for higher education should reach 2.8 million seats in 2030, compared to an estimated 1.97 million seats in 2022. 

“Crown Prince Mohamed bin Salman announced that Riyadh would become one of the top 10 cities in the world. Its population may grow from 7-8 million to 18-20 million in the next 10 years,” says Ahmed. “The ambition is also to make Riyadh a regional hub for all the international companies and that attracts a lot of expatriates.” 

Growth is also expected in cities such as Jeddah, Medina, Al-Asha and Mecca. 

Rising demand for higher education opens a whole range of opportunities as new campuses and student accommodation need to be constructed and equipped, along with related infrastructure. 

Infrastructure excluded, 80 per cent of spending will be related to construction and 20 per cent to equipment and other requirements, according to Colliers. 

Adding around 900,000 seats in the higher education sector by 2030 – an average of 110,000 a year – calls for an investment of $36bn to $54bn

Public sector dominates

Like other parts of the Saudi economy, the higher education sector is being revamped to better prepare the young generation to compete in the increasingly technology and information-driven economy. 

As part of economic transformation plans, the Saudi government is also focusing on increasing private sector participation in education, including higher education, in a bid to change its role from a service provider to a regulator/facilitator, states the report.

However, the shift is gradual and higher education is still heavily reliant on public institutions. 

According to the report, 95 per cent of students attended public sector institutions in 2022, as “these are free of cost and generally perceived to offer a better quality of education compared to the private sector”, states Ahmed. “But things are changing quickly. There are a lot of investments coming from the private sector now.” 

Out of 900,000 seats needed, at least 40,000 to 80,000 will be created in the private sector.

Call for foreign universities

A significant change came in 2019 when private foreign universities were permitted to open campuses in the country. Foreign companies and institutions are now allowed 100 per cent ownership of Saudi Arabia-based education facilities. 

This opens new market opportunities for investors, developers and operators.

At the same time, outbound Saudi student mobility is changing. Based on the latest data available from the General Authority of Statistics (GAS), in 2019 there were 100,585 students from Saudi studying abroad, says the report.

This is a drop of 49 per cent compared to 2012-13.

In 2013-14, almost 200,000 Saudi students were studying abroad. Most of them (87 per cent) were fully funded by the King Abdullah Scholarship Programme (KASP).

“The numbers are going down, as the Saudi government is putting a cap on the scholarships,” explains Ahmed. 

There is a clear desire to “improve the quality of education in Saudi Arabia by attracting international institutions where most of the Saudi youth pursue higher education”, adds the report.

Colliers suggests that the private sector, similar to in the UAE and Egypt, should open branch campuses of international universities in the kingdom, especially targeting universities with many Saudi students in their country of origin.

“We are in discussions with some British institutions who would like to come to Saudi,” says Ahmed. “I am sure there will be some US institutions and German, or even from India, that would like to come to Saudi as well.”

Meanwhile, the National Centre for Privatisation (NCP), established in 2016, is inviting education-focused public-private partnerships (PPP). “There are several public universities that will be redeveloped or expanded under PPPs,” adds Ahmed.

That represents new opportunities for foreign investors, as local partners can facilitate administrative processes and access to the market.

Future skills

An emphasis is also being put on promoting new fields of study in the technology, healthcare, tourism, and small and medium-sized enterprise (SME) sectors.

Historically the centre for religious tourism and pilgrimages for Muslims, Saudi Arabia is developing new leisure destinations such as Al-Ula, Qiddiya, Neom and The Red Sea Project. The kingdom plans to attract 100 million tourists by 2030 and boost the tourism sector's contribution to GDP to 10 per cent by 2030 from 3 per cent at present.

Currently, a significant proportion of staff in the tourism and hospitality sectors in Saudi Arabia are expatriates, but the government has decided that at least 30 per cent of the staff must be Saudis and all front desk/managerial roles should be assigned to Saudi nationals only.

“Saudis are becoming keen to seek roles in hospitality as demand grows,” says Ahmed.

In healthcare, over 200,000 professionals need to be hired by 2030, so there is a need for more medical schools too.

Finally, Colliers says demand will shift from traditional offerings towards fields such as artificial intelligence, robotic sciences, nuclear, sustainable, renewable and solar energy.

The new developments such as Neom and the Red Sea Project are very much suited to bringing big names from the UK, US or Germany in these domains, says Ahmed.

The current enrollment distribution in public universities lacks alignment with the employment market requirements. 

Students choose mostly humanities, Islamic studies and behavioural sciences. “The demand is expected to shift towards evidence-based research and development (R&D) studies … under Vision 2030 and the changing market dynamics … to overcome the mismatch between the degrees, skills and requirements of the employment market.”

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