A booming population, rise in income levels and improved returns on investment in education are boosting growth in Dubai's school sector.
Dubai will need an additional 77,000 student places, translating into 51 new schools by 2020, according to a new report.
Total additional investment required to meet these needs will total $2 billion over the next six years, research firm Colliers International, the report author, found.
“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,” said Mansoor Ahmed, director of Healthcare, Education and PPP at Colliers International.
Dubai’s population, which is expected to reach 3.5 million by 2020, is one of the key factors driving the emirate’s private education market, Colliers said. Moreover, around 11.5 per cent of the emirate’s population is comprised of millennials and children of school going age.
Other factors fuelling growth include increasing income levels, enabling parents to pay higher tuition fees, and high returns on correctly executed educational investment.
“Three factors have come together in Dubai to make it very attractive to educational investment; firstly a population growth rate of 6.7 per cent, 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,” said Ahmed.
Colliers also said that tuition fees across private schools varied significantly depending on the curriculum and the quality of the facilities offered. Fees ranged from as low as Dhs1,725 per annum to Dhs100,000 annually, the report showed.
American schools had the highest fees followed by schools with IB, British and then Indian curricula, with almost 60 per cent of students across all grades paying an average of Dhs15,000 per annum.
Despite robust growth in the sector, the industry still grapples with a number of challenges, most importantly the ability to attract and retain quality staff, the report found.
“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,” said Ahmed.
“Effective international recruitment process is imperative in order to achieve operational success.”
Another challenge is the reluctance of banks to provide to provide funds to new players in the market, with financiers sticking to established players.
“Further difficulties arise with the terms offered. Education investments are typically long term investments while banks’ risk appetite in shorter term loans between five to seven years,” Ahmed added.
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