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The sector, however is currently facing a slowdown amid a weak economic environment and low oil prices as consumers scale back new car purchases. Passenger Car sales will remain under pressure in but are likely to rebound in and thereon grow at a stable pace in anticipation of a recovery in oil. Other factors fueling growth include increasing disposable income, growing population and availability of attractive financing options in the country.
New passenger car sales are projected at 1. Although new sales declined in and will be under pressure in , we expect to see steady growth starting as the economic environment stabilizes and creates pent-up demand. The anticipated growth is slower compared to that during last five years in view of the near-term softness in economic activity, as consumers tighten discretionary spending and delay buying new cars. Between and , passenger cars in use in the GCC countries is anticipated to register an annual average growth rate ranging from 3.
New car sales in the UAE are projected to grow at an annualized rate of 4. A rise in population coupled with demand from car rental or tourism agencies in view of increasing tourist arrivals is also expected to support new vehicles sales growth, going forward. Backed by an active tourism market, the GCC hospitality industry remains firm on its growth trajectory. Government measures to bolster tourism activities in the region like encouraging private sector investments, building new attractions, expanding airport capacity, and increasing international promotion campaigns are providing impetus to the growth of the Hospitality sector in the region.
A thriving segment of meetings, incentives, conferences, and exhibitions MICE , spate of technological advancements, and brisk development of midscale hotel properties are amongst the key factors elevating the appeal of the GCC hospitality sector. The GCC Hospitality market is expected to grow at a 7.
The market size of the GCC hospitality sector is anticipated to decline in , however growth is likely to recover from The key operating metrics of the sector is expected to remain under pressure in the short-term, mainly in the UAE and Qatar, but is likely to rebound in the long-term supported by demand.
The GCC education sector is witnessing a robust growth in student enrolments coupled with a steady expansion in related infrastructure. Population growth and rise in disposable income have supported the growth of the private education sector. Further, Government measures to encourage private sector investments alongside an increasing preference for international curricula among residents are also attracting renowned foreign education institutes to the region.
According to Alpen Capital, the total number of students in the GCC education sector is projected to reach An expanding base of school and college age population and increase in the Gross Enrollment Ratio GER across the education segments are likely to drive the growth. The number of students at private schools is projected to grow at a 5.
Enrolments at public schools are anticipated to increase at an annual average of 2. During the forecast period, the number of students in pre-primary annual average of 4. However, students at primary and secondary segments will continue to form over three-fourth of the total students.
Saudi Arabia will continue to dominate the education market in the GCC by From an estimated 9. In terms of annualized growth during to , the number of students in Oman, Qatar, and the UAE are projected to grow faster than the other member nations.
The demand for schools in the GCC region is likely to increase at a 3. This signifies requirement of more than 7, schools in the next five years, most of which are anticipated in Saudi Arabia. While the demand for public schools in the GCC is expected to increase at an annual average of 2.
For more details please click here to access the complete report. Development of the healthcare sector has taken a center stage in the GCC countries, as they witness an era of demographic transition accompanied by rising prevalence of lifestyle-related diseases. In order to ease the growing pressure on the healthcare system, the GCC governments are injecting huge funds as well as encouraging private sector participation to build hospitals and clinics, upgrade the existing infrastructure, and match the quality of services offered in developed countries.
They are also investing heavily in technological advancements as well as rolling out mandatory health insurance schemes in all the countries to further accelerate the growth of the healthcare sector. We see this trend strengthening as governments and private companies work with each other to benefit from the opportunities presented by the GCC healthcare sector.
An increase in the population and rising cost of treatment are the primary factors aiding this growth. The demand for number of hospital beds in the GCC region is projected to grow at a 2. The report also covers the recent trends, growth drivers, and challenges faced by the industry, in addition to presenting an outlook, in terms of premiums until It profiles some of the select insurance companies in the region, while evaluating their financial and valuation metrics.
We have projected two possible scenarios for the growth of the GCC Insurance Industry based on the economic growth projection of IMF, growth in population and inflation levels. Additionally, population growth is expected at a CAGR of 2. The resulting improvement in insurance penetration and density levels based on historical regression analysis is likely to bring about growth in GCC insurance premiums for the period Growing at a CAGR of The insurance penetration in the GCC nations is expected to increase to 3.
At the same time, insurance density is expected to more than double. In , eight insurers in Saudi Arabia re-capitalized their balance sheet to comply with the regulatory requirements and fuel future growth, leading to an almost Saudi Arabia, the largest country in terms of population, is likely to overtake the UAE as the largest insurance market in the region and drive the growth of the GCC insurance industry between and Qatar is one of the fastest growing markets and is likely to remain at the third position after the UAE and Saudi Arabia, with a market share forecast of around The GCC construction industry foresees growth from , encouraged by factors such as favorable macroeconomics, higher government allocation, positive demographics, and rising tourism activities.
Higher budget allocation towards construction sector, as part of the strategic vision of the member nations, lends an added push to the industry. The report presents the demand-supply dynamics of the GCC food industry across its countries and major food categories. The report also highlights the recent industry trends, growth drivers, and challenges in the industry.
The food demand in the GCC is driven by several factors including a growing population base, increasing affluence and rising tourist inflow within the region. The GCC food sector is expected to grow at a 3.
Cereals are likely to remain the most consumed food category, accounting for However, rising consumption of high-priced protein-rich and healthy foods is expected to gradually eat into the share of cereals in the total food consumption.
Subsequently, cereals consumption is expected to show an annualized growth of 3. Detailing a comprehensive perspective on the retail industry, the report states major market characteristics and changing dynamics of the industry.
The report examines the key sub-segments of the retail market by analyzing the fundamental growth drivers and significant challenges and developments. The comprehensive report also profiles some of the big names in the retail industry of countries in the region.
The retail industry continues to maintain a positive momentum attributed to key factors influencing the market like robust economic growth, rising purchasing power, growing population comprising a large proportion of expatriates, changing consumption patterns and increasing penetration of international retail players. Retail structure in the GCC region is undergoing significant transformation, driven by the social and economic developments that has resulted in an increase in modern retail formats such as hypermarkets and supermarkets.
The Gulf is also gearing to host events such as World Expo and FIFA , leading to a growing influx of tourists and creating immense opportunities for existing and new retailers in the region. The GCC retail industry is expected to grow at a 7. The GCC Aviation Industry Report provides a perspective of the GCC aviation sector by presenting the current industry status, key market dynamics, and scope for future growth.
It examines the key sub-segments of the aviation market by identifying fundamental growth drivers, significant challenges, and recent trends. GCC is emerging as a key aviation hub, which is being capitalised by regional airlines and promoting the overall growth of the aviation sector in the GCC region. The growth is also being fueled by strategic development across sectors like infrastructure, tourism, healthcare, education and sports facilities.
Alpen Capital in its report predicts that the growth in air passenger and air cargo traffic in the Middle East, between and , is likely to outperform that across all other regions. As a result, the total fleet size in the region is expected to increase at a 4. The business jet fleet size in the Middle East is projected to grow to from between and The report encompasses profiles of each GCC country and highlights the existing market scenario in the healthcare sector.
Finally, the study covers profiles of major publicly-listed and private firms including details about their performance and market position. The GCC region is poised for an unprecedented surge in healthcare consumption driven by robust population growth and rising income levels. Higher income levels and sedentary life styles have led to poor health conditions, a phenomenon that has been witnessed in most developed economies.
The governments, which play the predominant role in healthcare services, are taking steps to ensure continuous development of infrastructure through nurturing management skills, increasing the share of private sector and utilising IT skills to spread the reach and range of healthcare services. We are bullish on the prospects of the healthcare industry in the region. On the demand side, rising affordability, lifestyle related diseases, the treatment of which is both costlier and lengthier, and increasing insurance penetration will ensure vigorous rise in healthcare spending in the GCC.
On the supply side, the government is taking measures to ensure that the infrastructure is equipped to handle the increasing demand. The government is considering PPP models to bring efficiency while reducing financing burden, along with other measures such as e-health and m-health tools. There is dearth of highly qualified medical practitioners in the region and hence influx of foreign practitioners will continue to remain a trend.
Private sector has limited presence in the industry at present but will play an important role in the time to come. The demand for number of hospital beds is expected to be , in , an addition of 11, beds from , which is in line with the expected supply looking at the number of projects in the pipeline. The GCC Education Industry Report presents the growth prospects of the GCC education sector, based on the current developments within the sector, key market dynamics, and the existing investment opportunities in the region.
The scope of the report encompasses the pre-primary, primary, secondary, tertiary, and vocational training segments across all GCC nations. Further, the report profiles the six GCC countries as well as some noteworthy private educational institutions in the sector.
The growth of the GCC education sector is driven by factors such as population growth, increasing number of expatriates, the rising importance of high-quality education in the society, and a growing spending propensity. The sector is gaining additional momentum from governments across the GCC that are acknowledging the need for an education system capable of producing industry-ready graduates.
Thus, with increased focus on improving the quality and reach of education in the region, the sector presents an interesting investment opportunity. The UAE is the most developed education market in the region and is an emerging education hub.
Both the nations account for relatively mature K and tertiary education segments. Following these leaders are the Qatari and the Omani markets, which are growing with support from planned education reforms. The education markets of Kuwait and Bahrain are growing at a modest pace. The report evaluates the current demand and supply situation, growth dynamics, future prospects as well as the challenges faced by the GCC hospitality industry. The GCC economies are well on their way to recovery from the global economic crisis.
Due to the forecasted increase in demand, the sector is going through capacity expansion as well as increasing investment into infrastructure. The GCC hospitality industry is expected to grow at an annual rate of 9. Saudi Arabia is expected to continue its dominance as the largest market in terms of revenues, followed by the UAE. Upcoming mega events in Qatar and UAE are expected to be the key growth drivers for the hospitality industry in these countries. The research paper titled GCC as an investment destination - Opportunities for Indian companies explores the favourable characteristics of the GCC and the opportunities it presents to Indian investors.
The GCC offers distinctive advantages for overseas investors. The reforms and initiatives undertaken by the GCC governments in diversifying their economies by promoting growth of non-oil sectors have also created several investment opportunities in the region.
This can be achieved by increasing private sector participation, strengthening local technological capabilities, developing a skilled workforce, improving the competitiveness of exports in global markets and by attracting substantial overseas investments. GCC offers strategic advantages, such as availability of cheap energy and feedstock supply, low tax environment, well-developed infrastructure, growing population and increasing income levels, conducive for the development of various industries in the region.
All these advantages if properly showcased could attract substantial investment flows from Indian corporates, who are looking to expand their global footprint and scouting for distinctive cost advantages to remain globally competitive. The report also provides a long-term industry outlook and proposes recommendations that could help attract higher foreign investments, bring regional drug prices closer to the world average, and aid the overall market growth.
The GCC pharmaceutical industry is expected to experience sustainable growth in the medium to long term. These factors are supported by growth drivers such as population growth, increasing life expectancy and growing income levels which will further enhance the expansion of the sector. The GCC pharmaceutical sector has witnessed considerable progress over the years on the back of favorable demographic and economic factors, alongside strong government support for healthcare Expansion of pharmaceutical sales in Qatar and Bahrain is projected to outpace the overall regional growth rate, thus translating into a higher market share of these countries at the regional level going forward.
The remaining Gulf countries are forecast to either maintain a stable share or experience a decline in their representation in the GCC pharmaceutical industry. Nevertheless, Saudi Arabia is expected to maintain its position as the largest pharmaceutical market within the Gulf in the foreseeable future. The UAE is also likely to retain its ranking as the second largest pharmaceutical market. Alpen Capital today announced the publication of its GCC Food Industry Report which focuses on production, import and consumption volumes of key food segments and their growth potential.
It analyses the growth drivers, trends and future prospects for the sector, shedding light on the challenges that could impact the sector's profitability and growth in the future.
This increase is attributed to the rapidly growing population in the GCC, increase in foreign tourists as well as the rising income levels of the region. The insurance industry in the Gulf Cooperation Council GCC has experienced steady growth on the back of economic development, population expansion, improved regulatory environment, and increased product awareness. However, the non-life segment is forecast to expand at a much higher rate of The insurance penetration in the GCC is expected to improve from 1.
Non-life insurance penetration, which is likely to surge from 0. By , insurance density in the Gulf is anticipated to more than double from the level as increased number of people and businesses avail insurance cover. However, the gap between density in the life insurance and non-life segments is projected to widen substantially, going forward. Alpen Capital announces the publication of its fourth industry report for the year highlighting the favourable factors that make GCC an ideal investment destination for Indian investors.
As Alpen Capital focuses on business opportunities that exist between the GCC—India corridor, the report outlines several characteristics of the region that makes it attractive to Indian companies.
According to the report, GCC offers strategic advantages, such as availability of cheap energy and feedstock supply, low tax environment, well-developed infrastructure, growing population and increasing income levels, conducive for the development of various industries in the region. All these advantages if properly showcased could attract substantial investment flows from Indian corporates, who are looking to expand their global footprints and scouting for distinctive cost advantages to remain globally competitive.
The report also includes quotes from Indian conglomerates who have established a presence in the GCC as well as companies in GCC who are looking to India as an investment destination. For more details please click here to access the research paper. Though the construction and real estate sector has started recovering from the lows of , growth is still far from pre-crisis levels.
The growth is also not uniform across all regions within the GCC and while some countries are leading the recovery; others continue to take a more careful approach.
In Bahrain and Saudi Arabia, the focus of the residential construction sector has shifted to providing affordable homes to the low and middle income group population. We foresee continuation of this phase in near to mid-term. Alpen Capital's research paper - Trade and Capital Inflows between GCC and India analyses the development of bilateral trade both merchandise and services and investment capital flows over the last 10 years, thereby highlighting key attributes that have helped foster stronger economic cooperation between the two economies.
It also covers the future growth potential of trade and capital flows between the two regions. Economic relations between India and the GCC date back to several centuries. However, the two-way trade between the two regions has strengthened over the last decade. This is particularly due to the substantial economic power attained by these regions on the global map following the spectacular economic growth since FDI investment from GCC to India has picked up pace in the recent years but remains negligible relative to trade flows in terms of magnitude.
With the economic forecasts pointing to strong GDP growth in both the economies, we emphasize that there is an ample scope of strengthening economic ties between GCC and India.
While the GCC needs to promote more industrialization and SME participation in order to realize its diversification dream and create jobs for its rapidly expanding population, India needs to further improve its basic infrastructure and reduce complexity in the regulatory practices. We recommend GCC investors to further diversify their investment portfolio by taking positions in the promising Indian investment avenues as the return on investment remain relatively robust.
At the same time, due to its locational advantage and abundance of natural resources, GCC has the potential to serve as a manufacturing base as well as an export hub for Indian companies. All segments of the GCC education sector is poised for consistent growth in the future driven by increased private sector participation, growing focus on quality education, and strategic plans of various governments in the region to improve the education system through reform programs.
We expect the higher education segment to witness significant private investment in the long-term, which will result in more private institutions opening across the GCC region.
This will also have an impact on improving the higher education standards in the region and help meet the ever growing demand for this segment. Total number of students in the pre-primary and tertiary segments is expected to outpace the growth rate of schooling primary and secondary segment, witnessing a CAGR of The share of students in the pre-primary segment is expected to increase from 5.
Growth in the total students in the region is primarily attributed to the increasing population in the region. Higher demand for education will also propel growth in the number of schools in the region. By , the region is likely to have a total of 51, schools; out of which Alpen Capital also forsees that the number of higher educational institutes across the GCC region will rise mainly on the back of rising enrolment rates in the GCC member countries.
The GCC hospitality sector is poised for a healthy growth owing to factors such as favourable economic conditions combined with infrastructure development, increased bids to host high profile global events and government support to the private sector. All these factors have contributed to the steady increase in tourist arrivals which in turn has facilitated the growth of the hospitality industry in the region.
The industry has strong fundamentals and is beginning to realize its potential. Accordingly, we believe that the industry presents itself as an excellent opportunity for all stakeholders.
As business and leisure tourism continues to grow and the up-scale hotel segment account for most of the demand for hotels, ADR is likely to average around USDUSD between and Qatar is expected to be one of the fastest growing market, driven by rising business tourism and leisure tourism as the country prepares itself for the FIFA World Cup , and in order to achieve its national vision.
Retailers have benefited from the government initiatives and progressive policy agenda and have a healthy period of growth ahead of them. Food retail sales are anticipated to expand at a CAGR of 8.
Food sales growth will outperform non-food sales growth during the forecast period as high-value and healthier food products could find greater demand. Sales of supermarkets and hypermarkets in the GCC are expected to grow at an annual average rate of The relatively under-penetrated markets in terms of modern grocery retail formats like Saudi Arabia, Qatar and Kuwait are likely to outperform the mature UAE market. Although the growth of the luxury segment may be moderate in due to the global economic uncertainty and high base effect, outlook for the segment remains positive.
While the sector presents attractive opportunities, it is highly competitive and retailers need to continue to innovate so that they can achieve sustainable growth and profitability.
Secondly, the GCC region has had continued economic growth and a healthy GDP projected for the future from which the Hospitality industry will benefit as its strategic location makes it attractive to tourists from UK, Europe and the GCC itself. One of the main challenges impacting the industry is the wave of political unrest and uncertainty across parts of the GCC region as well as the larger MENA region, which may negatively impact tourist arrivals.
Despite these factors, the outlook for the GCC Hospitality industry remains positive for — due to the strong growth drivers. For more details please click here to access the complete version of the GCC Hospitality Industry report. Overall food consumption too will grow at a faster pace than it did over the last three years, owing to the rising incomes as well as fast growing population in the region.
It is expected to expand at a CAGR of 4. This development is in line with global trends. While per capita cereal consumption is expected to decrease progressively across all countries; cereals will remain the leading segment, by volume. The consumption of milk is also likely to increase considering that the per capita consumption is low in the region compared to that in developed countries. Insurance industry in the GCC has not been immune to the financial crisis.
The accelerated pace prior to hit the speed breaker as oil prices troughed on receding global activity and tightening credit markets. While the sector has been resilient, and has registered a modest growth when most other markets were in the red, the pace of growth has shifted to a lower gear.
As the region recovers from the downturn, diversified economic growth of the GCC countries, supportive government regulations and favorable demographics are creating an environment that is conducive for growth. We expect the sector to see higher levels of growth during the period - The GCC insurance industry is relatively small with significantly low levels of insurance penetration and density.
While this points to the size of the growth opportunity, GCC insurers continue to face a number of challenges. The region has very high cession rates showing a high dependence on reinsurers.
At the same time, the investment portfolios of the insurance companies are heavily tilted towards equities, making them vulnerable in a volatile market. Most GCC countries are experiencing rebounding economic activity. The region continues to diversify away from hydrocarbon dependence and have invested across varied sectors. The diversification has given way for robust growth in non-life insurance segment. With substantial projects underway in multiple sectors, the demand for financial services, especially insurance, is expected to rise steadily in the coming years.
Non-life premium penetration is expected to increase from 1. In addition, increasing growth of Takaful will provide a strong impetus to the Insurance Sector. Takaful, which is Sharia compliant, has significant appeal amongst the local population in the region.
Increasing GDP remains the primary growth driver for the insurance sector. Life insurance will also gain momentum with rising population and increasing per capita income. In addition, as GCC countries continue to diversify and develop new sectors, this will bring in new projects which will increase the demand for non- life insurance. Another growth driver for the sector is the introduction of compulsory health, third party motor and home insurance which has resulted in significant premium growth in the non-life insurance segment.
Alpen Capital's GCC Retails Industry report provides a perspective of the retail sector in the GCC by examining the current industry status and size, key market dynamics, and scope for growth in the future. In addition, it includes profiles of the six GCC nations identifying country-specific macroeconomic attributes, drivers for retail growth, and recent industry developments. Growing per capita GDP and disposable income, expanding population base and consistent inflow of tourists will boost the region's retail sector going forward.
The Middle East luxury goods market looks poised for strong performance going forward. Having contributed substantially to overall retail sales expansion, the mid-market segment has broadly tracked the overall retail industry growth trajectory and is expected to continue on a similar trend going forward. There are several factors that are contributing to the growth of the retail sector.
Largely urbanized consumer class with a young age profile is likely to drive demand in the retail market. The number of high net-worth individuals in the Middle East increased The region has seen substantial investments in the development of world class infrastructure, tourism, and hospitality sectors.
Saudi Arabia is expected to see 9. Various retail categories including the luxury segment are witnessing a robust demand from Chinese tourists. Strategic geographic location and government focus on attracting tourists have given a massive boost to the growth of passenger traffic in the GCC.
These are the biggies… John In a nutshell, what has your response been to these observations? There are a lot of profitable projects around the world. Hollywood makes around movies per year, and many of those are not profitable.
There are a lot left over. This is certainly not anything an ordinary platform operator can do. And if a second operator would request the same thing, the answer would most likely be no. In addition, a new investor would have a much worse deal in comparison to the others.
It would be much harder for the platform operator to make money than the other financing partners. Can you expand on that? When we apply for regulatory approval, what do we need to prove to the regulators? The exchange is built to manage risks. Are there risks in Hollywood? Is the Pope Catholic? All other industries have standard insurance policies for anything under the sun, but not for media production and distribution.
There is virtually no way to affordably insure against a bad opening or a bad run. It may be good for competing titles, but stakeholders only suffer losses. And our software is amazingly rich and informative thanks to our software partners, Kapp Software. Careers wax and wane. Maybe certain studios and actors are enjoying extraordinary success at this time. But all too often, what goes up comes down. These same studios and actors may need a facility like this when money-raising becomes harder and risk mitigation becomes more important.
Therefore, the conclusion that an exchange is unnecessary is a hard one to swallow. What if buyers needed to sell recently purchased assets. John What about costs associated with developing new projects? Ross We envision ourselves being very involved in the development process in the coming months and years. Our model allows us to have a development budget for promising projects. There are many cases where prominent Hollywood stars have their own production companies, and they pay all development costs.
Then they go to a studio or to the bank depending on how they want to distribute their movie. This is yet another way we can be helpful. Wins may not come immediately, however more profitability can be gained by entering into strategically advantageous positions.
Risks can also be properly mitigated. There are more ways to prepare for future months and years as the media business adapts to new modes of distribution. In years past, I used to trade commodities and stocks each morning. I spent about 30 minutes to an hour, and it was fun. In the beginning I lost some money because I made some bonehead moves, but over time I had a system dialed-in, and I made money consistently.
Even when the wild market corrections hit. Practice makes a big difference. Ross Thanks so much, John! John Always great to see you, Ross. He has lately become an expert on publicly traded stocks, and serves as the editor of the daily Zacks Large Cap Trader newsletter and previously, on the International Trader. He re-publishes industry articles for Modern Trader magazine too; and opines on monthly macro and top-down investment strategy, and forecasts for global financial markets — for Zacks Premium and Zacks.
These reports can also be found on Fidelity. He writes their Zacks Stock Market Outlook report. John appears frequently on national TV to discuss individual equities, stock markets and the global economy, mostly with CNBC. Economics outlook, and the latest CIO Survey insights. John earned his PhD.