Dubai, November 11 2014 – in the last few years Dubai’s education sector has witnessed significant and rapid development. The growth is primarily led by local operators but also latterly by a number of major international, mostly UK, operators who are capitalizing on the significant opportunities that it represented.The Dubai Education Overview issued today by Colliers International, a global leader in providing real estate services in sectors including healthcare and education, provides a brief snapshot of the key factors impacting the Dubai education sector and its future outlook.
Colliers International identified population growth as one of the key factors driving demand for education in Dubai, with the population expected to reach 3.5 million by 2020. Other identifiable factors supporting growth include: a large concentration of Generation X, Y (Millennials) and Z (school going age) as 11.5% of total population are of school going age; increasing income levels enabling parents to pay higher tuition fees and the high returns on correctly executed education investment.
Mansoor Ahmed, Director of Healthcare, Education and PPP at Colliers International explained: “three factors have come together in Dubai to make it very attractive to educational investment; firstly a population growth rate of 6.7%, secondly the rising income levels and tax free status and finally the introduction of property ownership for expatriates which in turn commits people to stay longer in Dubai than previously “
The report reveals that in Dubai the average number of students in a school varies based on the curriculum, size, tuition fees and facilities its offered; Indian average 2,683 students, British 1,338 students, American 1,479 students, and IB average 1,153 students per school.
Highlighting the demand for junior schools the report identifies the percentage of students at the various grades; Foundation Stage 19.2%, Primary 42.0%, Preparatory 24.6% and Secondary 14.2%.
Colliers’ report also highlights that tuition fees charged by private schools in Dubai vary significantly in terms of curricula, type and quality of facilities offered, and staffing standards. Private schools charge from as low as AED 1,725 per annum up to the most expensive school in Dubai with a tuition fee in excess of AED 100,000 annually. American schools command the highest range fees followed by IB, British and then Indian. But almost 60% of student population across all grades pay an average of Dhs 15,000 per annum.
Mr. Ahmed highlighted that “interestingly Colliers’ analysis of tuition fees and teachers / student ratios in the top schools in Dubai reveals that lower student / teacher ratio or higher tuition fees does not guarantee a higher quality of education. Many low tuition fee schools and high teacher student ratio schools have achieved an “Outstanding” rating from KHDA”
“In the last decade, the private education sector has witnessed significant growth; doubling enrolment figures and introducing additional supply, which increased the competitive edge within the market. This trend is expected to continue in the near future and by 2020 Dubai will need an additional 77,000 student places translating into 51 new schools. This will require investment of an estimated US$ 2 billion”
Colliers estimates that the value of Dubai’s private schools’ properties reached US$ 6.1 billion in 2014, and is estimated to reach over US$ 8.1 billion by 2020. At the UAE level Colliers estimates that the value of the private educations property alone is projected to reach US$ 18.8 billion by 2020.
Commenting on the findings, Ahmed said: “a number of funding options are available to key education players. Banks, on the fund side, are also actively seeking investments within the education sector. However, they are limiting their investments to established players with proven track records. Investors entering the education sector with Greenfield projects struggle to find project finance unless there is recourse to alternative cash flows. Further difficulties arise with the terms offered. Education investments are typically long term investments while banks risk appetite in shorter term loans between 5 – 7 years.”
However, a number of issues remain to be addressed, especially retaining and attracting quality human resources which is the single greatest challenge faced by private school operators in the UAE.
“The major challenge facing operators is the ability to attract and retain quality staff in order to deliver on the promise of quality educational services. With the rapid growth operators desperate to recruit appropriate specialised staff have engaged in a cycle of recruiting from local competitors, this has been driving up salaries often beyond the concurrent increases the schools can charge in fees as the fee increases are capped by KHDA. Effective international recruitment process is imperative in order to achieve operational success,"