Browsing 'Alpen Capital' News

Mangos at Wholesale Market

Omar Chatriwala

Mangos at Wholesale Market

More meat, fruit and organic foods are landing in shopping carts across Qatar as residents develop a greater appetite for pricey and healthy fare from supermarkets, a new study has found.

Financial advisory firm Alpen Capital recently released a report on the GCC food industry that found Qatar residents spent US$11 billion (QR40.4 billion) on food in 2014, up 13.1 percent over the previous year.

An oversized shopping cart, since removed, was parked at the Hyatt Plaza.

Qatar Day/Facebook

An oversized shopping cart, since removed, was parked at the Hyatt Plaza.

The country consumed some 1.4 million metric tonnes of food in 2012 (the most recent year for which such statistics are available), or the equivalent of 7,600kg per resident. That’s up from one million metric tonnes – the equivalent weight of some 1.84 million cows – in 2006 and is expected to climb to 2.2 million metric tonnes by 2019, the fastest growth rate in the GCC.

According to the report, the nation’s rapidly rising population and growing number of tourists are two major reasons why demand for food in Qatar keeps increasing.

And at the same time, the country’s young, wealthy, urban – and increasingly obese – population also appear to be altering their shopping and eating habits.

This means residents are buying more packaged food from supermarket chains, the report says.

It also means that consumers have more money to spend on pricier food items such as meat and fruit, respective consumption of which grew at 19.6 percent and 9.1 percent annually between 2006-12, Alpen Capital said.

On the other hand, the increasing prevalence of obesity and related ailments such as diabetes and cardiovascular disease in Qatar and across the GCC also means more consumers are looking to improve their diet, the report’s authors added.

“High health awareness and a developing taste for a westernized diet, introduced by the increasing expatriate population, are bringing about a change in the region’s dietary habits, creating demand for organic and international foods,” Rohit Walia, Alpen Capital’s executive chairman, said in the report.

Stocking up

Qatar’s severe water shortage and lack of farmable land means that the country’s rising demand for food must be met primarily through imports.

This leaves the country’s consumers vulnerable to sharp swings in global food prices and supply disruptions.

Alpen Capital said Qatar currently faces a supply shortage of poultry, something shoppers most recently saw first-hand earlier this year when fresh chicken all but disappeared from grocery store shelves.

Photo for illustrative purposes only.

April Younglove / Flickr

Photo for illustrative purposes only.

In a bid to boost its domestic supply of poultry and eggs, Qatar had planned to construct a new 5.7-square-kilometer mega-farm, but subsequently put its plans to publicly finance the project on hold earlier this year.

However, last month, government officials indicated that private investors could still bid on the license to operate the facility.

In the meantime, the country has looked to source new supplies of poultry from Portugal and, more recently, Russia.

While Qatar is looking to boost its domestic food production, the high financial and environmental cost of desalinating water can make growing crops and raising livestock an expensive proposition.

As an alternative, officials in Qatar and other GCC countries are also making investments and buying up farmland abroad as a way of boosting their food security.

Al Mazrouah Yard farmers' market

Chantelle D’mello

Al Mazrouah Yard farmer’s market

But there’s still interest in increasing the supply of food grown – or caught – close to home. Various fish farms and aquaculture research projects have been proposed in recent years to protect Qatar’s dwindling fish stocks.

Meanwhile, Qatar has expanded the number of seasonal farmer’s markets selling locally grown produce. And Alpen Capital says that across the region, agricultural experts are experimenting with hydroponic growing techniques that produce fresh herbs and vegetables that use a fraction of the water as traditional farming methods.

Thoughts?

Education

Bindas Madhavi/Flickr

Though it is home to one of the Gulf’s fastest growing education sectors, Qatar’s tough regulations and high set-up costs are discouraging private firms from opening schools here, a new education report has found.

As the population rises rapidly to fuel the several mega-infrastructure projects ahead of the 2022 World Cup, competition has been fierce for highly coveted school places.

According to investment bank Alpen Capital’s latest GCC Education Industry Report, there is a “dearth of capacity to meet demand for quality education” here.

The report forecasts that the number of pupils enrolling in private schools in Qatar will rise by between 30 to 40 percent in the next five years.

This rise in demand for places is partly due to the increasing expat population, but also comes as the average Qatari family decides to spend more on children’s education, and utilizes the expanding voucher program to place their kids in private school.

The development and expansion of Qatar’s education system is one of the cornerstones of the National Vision 2030. Qatar has been working to increase the number of schools in the country, but the pace has been slow.

Expanding market

In March, the government announced that it is currently working to open 85 new schools in the coming 18 months. A large proportion of these facilities will be independent (state) schools, which operate in Arabic and are primarily for Qatari students.

private enrolment rates

Alpen Capital

Whether the private schools that will be built are enough to accommodate the growing population remains to be seen. According to Alpen’s report, Qatar’s private school market was worth $433 million, based on annual tuition fees.

And half of all enrollment rates in Qatar in 2012 were in private schools – one of the highest rates in the region.

The report said that across the GCC, demand for places at private schools is on the rise, adding:

“Parents prefer private schools over public ones as they offer a better quality of education, improved English language instruction, convenient locations, and a wider range of extra-curricular activities.”

students forecast

Alpen Capital

And overall, Qatar is predicted to have the highest increase regionally in terms of the total number of student enrollments by 2020.

Still, compared to the UAE, Qatar has far fewer international schools.

While Qatar is estimated to have 130 international schools to serve its population of 2.2 million (and growing), Dubai alone has 233 international schools for its population of 2.3 million.

Challenges

The report cites a number of issues facing private operators who would like to open schools in the Gulf region, including, according to Alpen Capital Executive Chairman Rohit Walia, “a shortage of skilled teachers and government control on fee hikes combined with the fact that it is a capital intensive industry.”

Qatar Development Bank (QDB) and the SEC have tried to encourage international investors with planned schemes such as 15-year education loan with subsidized interest rates of 3 to 4 percent to those looking to set up schools, the report said.

However, it noted that investors into Qatar’s education market are cautious, and in 2012, there were no venture capital investments in the sector.

This is “partly because of the high cost of setting up a business in the country,” the report stated.

While it acknowledges that Qatar is encouraging more of its younger population to become entrepreneurs, it added that “a tough regulatory environment is posing challenges in the industry.”

As a non-Qatari, setting up a business in the state can be a long and complicated process.

While the government did announce some imminent changes to the commercial register, which may make it easier for entrepreneurs in the country, a number of hurdles are likely to remain.

Other key challenges facing Qatar, and the wider GCC education market, include:

  • Shortage of skilled staff: Rising inflation across the region makes it more expensive to hire qualified staff to teach in the schools. Also, with a high turnover of teachers in the region – the average tenure is three years – staff need to be constantly replaced.
  • Fee caps: Many Gulf governments have put a cap on the fees private schools can charge, which limits their ability to get new staff and improve facilities. Qatar’s SEC has tried to address this issue by recently introducing a new system of assessment of schools applications to increase fees.
  • High set-up costs: Rising real estate prices, salaries and visa expenses mean that initial set-up costs for an international school are high. The report estimates that funds of between $50 to $100 million are needed to set up an international school in the region.

Trends

The report also highlights a number of emerging trends in education in the region.

curriculum chart

Alpen Capital

In Qatar, as in the rest of the GCC, it appears that British curriculum schools are particularly sought after. While half of Qatar’s private schools offer the Qatari curriculum, nearly one third (31 percent) run on UK-supplied curricula. This trend is likely to continue, the report stated.

Meanwhile, investment in special needs education was flagged as a particular area of demand. Teacher training programs and specialists in curriculum design are also highly sough after.

Additionally, governments in the region are now requesting the establishment of new “smart schools” that are equipped with the latest technology. Meanwhile, at a university level, there is a renewed focus on upgrading research and innovation abilities.

Other growth areas are vocational training, finishing schools, child-skill enhancement, and e-learning.

Here’s the full Alpen Capital report:

Thoughts?