Dubai
The United Arab Emirates is expected to be a major driver for investment into the region’s education sector with 30,000 new school places expected in Dubai over the next two years alone.
Alpen Capital, releasing its GCC Education Industry report on Thursday, expects mergers and acquisitions in the sector to continue in a positive trend.
“Private players, both local and international, are attracted to segments such as the K-12 and higher education, which are the largest within the sector,” stated Mahboob Murshed, managing director at Alpen Capital.
In the UAE, new school places are mostly expected in British and Indian curriculum schools due to the country’s diversifying demographic.
According to the study, the UAE has become a preferential educational destination for students, ranking 15th in terms of quality of education in a World Economic Forum (WEF) list of 148 countries.
Between 2007 and 2012, the number of primary school students in UAE private institutions rose from 1,897,000 to 2,654,000, a compound annual growth rate (CAGR) of 6.9 per cent. The number of students at UAE educational institutions, predominantly in Abu Dhabi and Dubai, are increasing partially due to families from other Middle East nations migrating due to instability in their home country, Alpen Capital states.
Dubai and Abu Dhabi are the most promising emirates for investment opportunities in the education sector. The private school market in Dubai is the most advanced with a market size of $1.1 billion in 2012, in terms of annual fees, followed by Abu Dhabi with $1.08 billion, according to Alpen Capital.
Fees in Dubai private schools can range from $470 to $26,190. In Abu Dhabi, fees can range on average from $854 to $11,852.
The study said that the UAE education industry is one of the fasting developing sectors globally with foreign intuitions growing twice as fast as the market.
However, start up costs bear a challenge to investors looking to set up in the UAE education market. The study said that the cost of setting up a school in the region can be as high as $14 million to $28 million. The tenure of investment is often between five and seven years. However, according to Alpen Capital, fund managers are now offering education funds with a ten-year term and a five-year extension option to allow time for returns. Though exits options are restricted with an initial public offering (IPO) becoming less realistic, according to Alpen Capital.
Overall, GCC states are expected to attract investment into their education sectors due to national and expatriate population growth, “rising importance of high-quality education in the society and a growing spending propensity,” stated Sameena Ahmad, managing director of Alpen Capital.
