Dubai’s rapidly growing population will mean it will
need to invest millions in its education sector to meet demand for new schools,
according to a new report by real estate consultancy firm Colliers
"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 $2 billion" said Mansoor
Ahmed, director of healthcare and education at Colliers International.
The report estimated that the value of Dubai's
private schools' properties reached $6.1 billion in 2014, and estimated that
this will reach over $8.1 billion by 2020.
"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," Ahmed added.
Colliers said population growth was the key factor driving
demand for education in the emirate, with the population expected to reach 3.5
million by 2020. It concluded that around 11.5 percent of the total population will
be of school going age by the end of the decade.
The report revealed that in Dubai the average
number of students in a school varies based on the curriculum, size, tuition
fees and facilities it’s offered. Indian schools average 2,683 students,
British 1,338 students and American 1,479 students.
Colliers also found 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 ($469) per annum up to the most expensive school in
Dubai with a tuition fee in excess of AED100,000 annually.
American schools command the highest range fees,
while 60 percent of students across all grades pay an average of AED15,000 per
"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," concluded Ahmed.
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