Class act: UAE is a magnet for private school investment

Taaleem

• 21 new private schools opened in Dubai since 2019
• Expat workers’ families drive demand for education in UAE
• GCC private education market value to double to $26bn by 2023

The post-pandemic rise in migration to the UAE is fuelling demand for private schools, making the Emirates a “magnet” for investors and school operators, industry experts have said.

The UAE’s population grew by one percent in 2021, according to the World Bank. The country’s population currently stands at 9.89 million people and is projected to reach 10.71 million in 2033.

“Dubai, Abu Dhabi and Sharjah are still very attractive for schools investment, as demand is being fuelled by the influx of new families into the UAE, as well as growing demand from local nationals,” Dubai-based Ashwin Assomull, partner and founding member of the Global Education Practice at L.E.K. Consulting, told AGBI.

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“Recent new school openings have been extremely successful and have enhanced investor appetite for opening schools in the region,” he added. 

“However, supply is filling fast. Both Dubai and Abu Dhabi are operating at around 80 percent capacity utilisation.”

Dubai’s education regulator, the Knowledge and Human Development Authority (KHDA), said on Tuesday that the emirate’s school sector continued to record steady growth, with four new private schools opening in the 2022-2023 academic year.

The new schools will offer 7,000 additional places across British, American and the International Baccalaureate curriculum.

In the past three years, 21 new private schools opened in Dubai, taking the total number of schools in the sector to 215 and international curriculum choices to 18.

The marked rise in the number of schools in recent years, particularly those catering to specific communities, is attributed to the city’s growth as a business, investment and talent hub and its rising role as a bridge between markets and cultures.

‘Magnet for investors’

“The private education market in the GCC countries has become a magnet for investors and school operators,” said Sajida Shroff, CEO at Dubai-based education investment and advisory firm Altamont Group. “This market was expected to double, from $13 billion to $26bn between 2019 and 2023.”

In April this year, enrolment in Dubai’s private schools crossed 300,000, the highest ever in its history, according to the KHDA.

Shroff said the UAE private schools market is the most mature of all the GCC countries.

“For instance, approximately 90 percent of Dubai and Sharjah students, and 65 percent of Abu Dhabi students, are currently enrolled in private schools. In 2017, the UAE’s $4.4bn market was forecast to grow to $7.1bn by 2023.” 

According to Shroff, the UAE market boasts a number of attractive features for private education investors and operators, including a diverse mix of expats, locally driven and resilient demand, supportive regulations and land parcel availability.

There is also continued strong demand across certain school categories, she added.

“There are numerous private schools that cater to the rising population of expatriates and Emirati students, yet there is still a good opportunity to invest in the country.” 

“To meet the needs of Emirati students, there is a need in the UAE for high-quality schools, with a rating of ‘good’ or better, that cater specifically to local preferences by offering gender segregation and adequate provision of Arabic and religious studies, for example,” she said. 

Shroff said there was particular demand among expatriate families for high-quality schools, with fees in the low-to mid-tuition range, structured around the Indian, standard UK, International Baccalaureate (IB), and US curriculum. 

“There is also an opportunity to leverage Dubai’s drive to become a test-bed for innovation by introducing schools with modern, digital approaches to education.” She said that Sharjah also needs more schools, as around 35,000 students currently go to Dubai from Sharjah to learn.

However, Shroff added that the education market was “fragmented” and operators need to focus on differentiating product offerings in order to strengthen their foothold in the market.

Demand for new-age and environment-friendly schools is expected to grow.

“GCC economies are reshaping themselves into knowledge-based economies and the focus lies in incorporating future skills into the curriculum and developing skills such as entrepreneurship,” Shameema Parveen, co-founder and CEO of Edutech, a learning solutions provider across classrooms, innovation centres and STEM labs in the Middle East, said.

“Another key focus area is sustainable development and preservation of the planet. Many schools are incorporating sustainability, climate change into their curriculum. Also becoming more prevalent is Service Learning, bringing in the concepts of global citizenship through community service.”

Greater choice for various budgets

Alan Williamson, CEO at education provider Taaleem, said the group’s schools have seen a “record number of enquiries for places” this year.

“New government initiatives targeted at recruiting and retaining highly skilled professionals into the UAE have led to a surge of interest from people new to the country,” he explained. 

“Our enrolments increased over the last two years despite the Covid pandemic. 

“We were the first in the market to offer all parents tangible support in the form of discounts to help our parents through some very trying times. 

“The investment we had previously made in technology across our schools meant that we were able to navigate the challenges of delivering distance education much better than some. 

“These factors gave many parents the confidence to make the switch from their previous schools and we were able to welcome many new families to our campuses.”

Taaleem is looking to welcome a record number of 27,000 students across its 26 schools this September, making it the second largest private education provider in the UAE, Williamson said.

He added that the group also noted an increase in enrolments from UAE nationals as more local families are seeking world-class internationally recognised education for their children.

With many new schools coming to the market each year, the CEO said parents are finding it much easier to find places for their children than was the case a decade or so ago. 

“There is much greater choice at differing price points to suit a family’s budget,” he said, adding that established schools with an ‘outstanding’ rating will continue to maintain success and have waiting lists, even in a highly competitive market.

UAE Ministry of Education

More than just big brands

Williamson warned however that investors looking to enter the market will need to bring more than a big brand name to succeed in the region.

“With the demise of investment attractiveness in some parts of the Far East, investors and operators have refocused their interest on the region,” he said. 

“Wise and seasoned investors in education will know that there is no quick return. 

“The time taken to recoup the costs of their initial investment can be up to a decade due to the J curve that is experienced in the education sector before costs are recouped and an ROI is established.

“There have been some super successes and spectacular failures of brand-name schools trying to establish themselves in the region,” Williamson added. “Paying a hefty price tag annually to have a historic established Western foreign brand’s name above the door does not necessarily lead to success. 

“It’s like trying to plant an oak tree in the desert, it has its challenges. 

“As one pundit put it, buying a Manchester City shirt for your child doesn’t necessarily lead to them playing like Phil Foden.”