Research from Colliers International suggests that there are lucrative investment opportunities in affordable schools to meet demand
Dubai will need approximately 134 new schools to accommodate 200,600 new seats in time for the 2027/2028 school year, presenting potentially lucrative opportunities for investors and operators to build affordable schools, according to a new report from commercial real estate services provider Colliers International.
In its “affordability in Dubai real education sector” report, Colliers noted that the current capacity of Dubai private schools is approximately 308,000, with a “very healthy” occupancy level of 86.6 percent. Based on the current population growth rate of 5.1 percent per annum, the total number of seats is expected to increase to 474,000 by 2027.
The report adds that while Dubai “is expected to maintain its status as one of most buoyant private school market in the world”, a recent HSBC study found that the cost of private education in the UAE is the second highest in the world, with parents spending an average of $99,378 for primary, secondary and tertiary education. Only Hong Kong – where an average of $132,161 is spent – was found to be more expensive.
To meet demand by 2027, Colliers predicts that 54 additional British-curriculum schools will be required, in addition to 25 American schools, 24 Indian schools, and eight IB schools, as well as 25 schools in the ‘other’ category – which includes Russian, Pakistani, French and German curriculu schools.
According to Colliers, “New Dubai” remains the most attractive growth corridor for expansion of new schools, driven by the proliferation of new affordable residential developments.
“Operators and investors can achieve approximately the same returns when investing in well managed affordable schools as a similar investment in premium schools,” the report reads. “This can be attributed to several factors such as reduced capital investment levels, a relatively faster ramp-up period, often higher utilisation rates and an overall higher number of students per class.”
While “lucrative opportunities” for investors and operators exist, Colliers highlights several challenges, such as high capital cost, a paucity of quality staff, greater regulatory oversight and increased competition.
“As the education market matures in the UAE, parents, now with a greater range of options, are becoming more selective,” the report notes. “Being more expensive does not guarantee better quality. Further, because of the slow-down in economic activities and increased competition the demand for affordable schools is expected to remain high.”