Colliers International - Dubai Education Overview


Colliers International

Healthcare | Education | PPP

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Our team in the MENA region:

Feasibility Studies | Due Diligence | Investment Memorandums (IM)

50+ (US$ 1.9b+) 12 Million ft²+ BUA 60,000+ Students

Land | Property | Business Valuation

20+ (US 3.5b+) 5 Million ft²+ BUA 25,000+ Students

Operator Search & Selection | Contract Negotiation

10,000+ Seats 6 Assignments

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Memorandums | Due Diligence |

Financing & Refinancing | Merger &

Acquisitions

Mixed Use Education Parks

2010 – 2014

Total Number of Seats

2010 – 2014

School Valuations for End of Year

Audit | Financing & Refinancing |

Merger & Acquisition

Mixed Use with Parks

2010 – 2014

Total Number of Seats Valued

2010 – 2014

CONDUCTED STUDIES FOR

20+ K 12 Schools

10+ British Schools

5+ Nurseries

5+ American Schools

5+ American Schools

2+ French Schools

2+ Indian Schools

1 German School

1 Medical College

1 Nursing College

Total Number of Seats

2010 – 2014 Ongoing Projects

Countries | Markets

UAE | Qatar | KSA | Oman |

Jordan Egypt | Sudan | Ecuador

Research & Forecast Report | Q4 2014 | Dubai Education Sector | Colliers International Research & Forecast Report | Q4 2014 | Dubai Education Sector | Colliers International 3

Ian Albert

Regional Director | Middle East


[email protected]


Colliers International is a global leader in commercial real

estate services with over 15,800 professionals operating out

of more than 485 offices in 63 countries. Colliers

International delivers a full range of services worldwide that

includes: valuations, consulting, appraisals, brokerage, asset

management and research, within the residential, commercial,

retail, hospitality, healthcare, education, infrastructure sector,

Public Private Partnership (PPP) and economic and industrial

free zones. In MENA Colliers International has provided

leading advisory services through its regional offices located

in Dubai, Abu Dhabi, Riyadh and Jeddah since 1996. The

latest annual real estate survey by Euromoney named Colliers

International ‘Best Advisor’ in the MENA region, UAE,

Qatar and Saudi Arabia.

Introduction

Dubai’s private education sector offers significant

opportunities for investors / operators. The following are

some of the key contributing factors:

• High population growth rate – The population of Dubai

reached 2.2 million in 2013 from 1.3 million in 2005,

registering a CAGR of 6.7%. Current projections

anticipate the population will further increase to 3.5

million by 2020.

• Population of the UAE and Dubai mainly consists of

expatriates – The majority of the population falls between

Generation X (1965 – 1980), Generation Y (1981 – 2000)

and Generation Z (2001 – present); which translates into a

wide base of young parents and school attending

population.

• Transient nature of Dubai’s population – This has resulted

in an apparent preference for international curriculums,

due to their transferrable nature.

• High returns on private education investments – High

quality, efficient international schools could achieve 15%

– 20% net profit margins after initial stabilisation years.

• Significant growth has been witnessed within the private

education market share – Growth has been supported by

preferential shift towards international education,

generated by the national population and GCC residents.

• International operators are expressing keen interest to

establish their regional presence in Dubai – Due to the

ease of market entry, absence of bureaucracy and positive

demographic and socioeconomic indicators.

• Supply of education facilities struggles to keep pace with

the burgeoning population – A situation recognised by the

government that has introduced a number of initiatives in

the recent past to encourage the private sector to match

the shortfall and benefit from this potentially lucrative

sector.

Colliers International Dubai Private Education Overview

Q4 2014 provides a brief snapshot of the key factors

impacting the Private Education Sector and its future

outlook in Dubai.

Mansoor Ahmed

Director | Healthcare Education & PPP


[email protected]

Shehzad Jamal

Manager | Healthcare Education & PPP


[email protected]

Research & Forecast Report | Q4 2014 | Dubai Education Sector | Colliers International 4

Macroeconomic Highlights

• Dubai is one of the major contributors to the

UAE’s GDP. In 2013, GDP increased by 4.8%.

• Being perceived as a safe haven amid regional

and political unrest, Dubai has enticed

investments from abroad increasing capital flow

into the emirate.

• Given positive government initiatives and the

successful Expo 2020 bid, the economy is

forecasted to continue its forward momentum

and sustain its economic growth in the

foreseeable future.

Source: Dubai Statistics Centre, 2013

Exhibit 1: Dubai GDP by Economic Activity Economic Overview The UAE is an attractive market for investors and companies,

reinforcing its position as a leading global business hub.

• Strong and stable economic growth – while economic

growth in developed countries remains sluggish, the UAE’s

GDP is forecast to grow between 3.4% and 3.9% annually

for the next 5 years.

• Highly competitive economy – ranked 19th globally by the

World Economic Forum (WEF), and the only Arab nation

to be classified as an innovation-driven economy, attracting

companies and talent from around the world.

• An efficient country – ranked 23rd globally in The World

Bank’s ‘Ease of Doing Business’ report, due to the lack of

bureaucracy and red tape.

• Attractive labour market – relatively affordable labour, no

income tax, and 84% of Dubai’s population between the

ages of 20 years and 65 years.

• Dubai is open-minded – new brands are often introduced in

Dubai before being rolled out in the rest of the region.

• Ease of access to Dubai – Dubai has the third best air

transport infrastructure in the world according to WEF.

Being 8 hours from two-thirds of the world’s population can

turn Dubai into a regional hub for providing high quality

education by catering to the boarding student population.

Construction

Restaurants & Hotels

Transports, Storage & Communication

Social & Personal Services

Mining & Quarrying

Financial Corporations Sector

Domestic Services of Households

Others


Strong Population Growth Rate

Dubai has one of the fastest population growth rates both

regionally and internationally.

According to the Department of Statistics, Dubai’s population

stood at approximately 2.2 million at the end of 2013, registering

a CAGR of 6.7% for the period between 2005 – 2013.

Colliers International estimates that the population of Dubai is

expected to reach 3.48 million by 2020, subject to it maintaining

the current growth rate patterns. Should the projected growth rate

increase to 8% due to various recent initiatives and infrastructure

projects being under taken by the Dubai Government, then the

population is expected to reach 3.80 million by 2020.

During 2005 – 2009, just before the global financial crisis,

Dubai’s population was growing by a CAGR of 13.3% –

compared to the period following the crisis (2010 – 2013), where

the CAGR stood at 5.1%.

Increasing population, coupled with rising average income

levels, will continue to feed demand for infrastructure and

services particularly in energy, water, telecoms, technology,

housing, education, and financial sectors, which consequently

will have positive impacts on the education sector.

Exhibit 2: Dubai Historical & Projected

Population Trends (in Millions)

Source: Department of Statistics; Colliers International 2014

Demographic Overview

Image Source: Colliers web

2.2

1.9

2.0

2.1

2.2

2.4

2.5

2.7

2.9

3.1

3.3

3.5

Projected

Actual

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The Rise of Generation X, Y & Z and its Impact on Education Demand

• Dubai’s private education sector has evolved

over the last decade to ultimately reflect

Dubai’s growing population, cultural shifts

and economic demands.

• Dubai’s demographic profile currently

illustrates a substantial population share of

residents aged 25 years – 40 years, which

indicates the forthcoming rise in demand for

primary education.

• Due to the transient nature of the expatriate

population in Dubai, parents prefer enrolling

their children within international schools,

this is mainly attributed to the pursuit of a

curriculum that is globally transferrable.

• The 2013/2014 academic year in particular

reflected the continuing recovery of the

broader economy, which should ultimately

enable families to settle for longer terms and

enroll their children into further education

cycles.

• The rise of Generation X and their dependents

from Generations Y & Z continues to dictate

the trends incorporated within the private

education sector in Dubai.

• As a result, the private education sector in

Dubai is expected to maintain a growth

pattern over the upcoming period.

Dubai’s population is heavily skewed towards males aged 25 – 40,

which is partially due to the construction workforce living in the

emirate.

Currently, 84% of Dubai’s population is in the active workforce age

group, i.e. between the ages of 20 years and 65 years.

97% of Dubai’s population is below the age of 50, and within

Generations X, Y & Z.

Exhibit 4: Dubai Population Pyramid

Source: Dubai Statistics Centre, 2014

Exhibit 3: UAE Population by Emirate and

Citizenship (%of total)

Source: Colliers International, 2014

Nationals Non-Nationals

Image Source: Colliers Template/ to be changed with appropriate image


“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.”


Education Overview Exhibit 7: Total Schools in Dubai

Source: Colliers International Analysis 2014

Source: Colliers International 2014

Source: KHDA 2013, Colliers International

Analysis 2014

The Ministry of Education oversees all emirate based education councils and authorities in addition to delegating a portion of its duties, in accordance with the federal mandate as shown below:

Ministry of Education

UAE

Abu Dhabi Education Council (ADEC)

Knowledge & Human Development Authority (KHDA)

Sharjah Education Council

Ras Al Khaimah Education Zone (RAKEZ)

Ajman Educational Zone (AEZ)

Ajman Educational Zone (AEZ)

Umm Al Quwain Educational Zone (UAQEZ)

Exhibit 5: Specialised Education Authorities – UAE

Image Source: Colliers Template/ to be changed with appropriate image

Exhibit 8: Students by Sector in Dubai

• In spite of representing almost 33% of the total schools in Dubai, public schools accommodate slightly over 11% of the total student population within the Emirate (Refer to Exhibit 7 & 8).

• The Private Sector in Dubai consists of 158 schools out of a total of 235 schools operating within the emirate, which is accompanied with an apparent dominance over the total school population within the Emirate.

• The 2013/14 academic year witnessed the opening of 10 new private schools within the Emirate.

• The forces of competition, aided by the dominance of the private sector, generate an active environment for improvements to the quality of education and supporting facilities.

Private Sector Students by Curriculum

Source: KHDA 2013, Colliers International Analysis 2014

• Historically, the British curriculum has held a robust leading share in student enrollment, which corresponds with the transferable nature of the curriculum and appeals to the expatriate population residing in Dubai.

• The total number of American schools is fairly higher than Indian schools, however, Indian school enrolment is significantly higher in comparison, which is mainly driven by higher school capacities, low tuition fees and the consequent aim to increase profitability.

Exhibit 6: Student Population Breakdown by Curriculum

88.7%

11.3%

Private Public


The population of Dubai has historically maintained a correlation with the economy. In times of rapid economic growth, population increases as companies draw people from different countries to meet their workforce requirements.

The student population has also increased in tandem with the overall population and economic growth. Since 2009/2010 the student population has increased with 82,800 students in 2009/2010 reaching over 243,700 students in 2013/2014, reflecting a CAGR of 7.5%.

Over 61% of students enrolled within private schools in Dubai (Refer to Exhibit 10) are currently attending early education cycles (Foundation and Primary Stages), which is aligned with the demographic landscape identified across the Emirate.

Furthermore, the highest historical growth in student enrolment during the period 2009 and 2013 was witnessed in FS1 and FS2 grades, with a CAGR of 11.1% and 9.6% respectively.

Student enrolments witness a declining trend as they advance into further education cycles (Refer to Exhibit 9), which is mainly due to the transient nature of the expatriate population residing within the emirate.

The student population within the private education sector in Dubai is almost evenly divided between both genders, with a male representation of over 52% compared to a female representation of almost 48%.

Emirati students enrolled within private schools in Dubai have almost doubled over the past decade, signalling an increased preference of Emirati parents exposing their children to private schooling.


Exhibit 9: Private Sector Students by Grade in 2014

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

24,000

26,000

Num

ber

of S

tudn

ets

Emirati Male Emirati Female Expatriate Male Expatriate Female

Exhibit 11: Typical School Size by Curriculum

Exhibit 10: Students by Education Cycle

in Dubai

Source: KHDA 2013, Colliers International

Analysis 2014

Source: Colliers International Analysis 2014

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

13,000

18,000

23,000

28,000

33,000

38,000

Avera

ge C

ap

acit

y

Typ

ical

GF

A R

an

ge (

m2)

Typical GFA Range Average Capacity

• Colliers’ analysis illustrates that American and top end British schools typically require the largest educational facilities, which is mainly credited to the focus on offering a wider variety of services and facilities.

• Indian schools exhibit the highest student capacity, which in relation to the typical GFA range results in the lowest area ratio per student when compared to other popular curriculums (Refer to Exhibit 11)


Private Sector Manpower

The total number of teachers has also achieved high growth in line with an increase in number of students, reaching 14,333 teachers in 2013 compared to 9,611 teachers in 2007, achieving a CAGR of 8.3% (Refer to Exhibit 12)

As of the end of 2013, almost 87% of the teachers in Dubai were employed by the private sector, which is in line with the prevailing market dynamics (Refer to Exhibit 14).

Females dominate the gender share of teachers employed by the private sector in Dubai, constituting approximately 80% of the total number of teachers.

Similarly, females also represent the majority of administrative and technical staff working within private schools in Dubai with a share of almost 71% out of a total of 7,410 support staff.

The exhibit below illustrates the constant growth pattern of teachers employed within the private sector between the period 2007 and 2013.

Exhibit 12: Teachers - Historical Growth in Dubai

(2007 – 2013)


Exhibit 13: Teacher - Student Ratio in Outstanding Schools

Source: KHDA 2013, Colliers International Analysis


• Based on the latest data available in 2013, the average student teacher ratio across private schools operating within the emirate of Dubai is recorded at 16 teachers (Refer to Exhibit 13).

• Schools that are ranked outstanding by KHDA generally have low student teacher ratios.

• However, not all outstanding schools have a student teacher ratio of below 1:13. Thereby, implying that KHDA also seeks excellence in other spheres within a school.

• Colliers’ analysis of available data shows that private schools rated as “Outstanding” in Dubai typically operate at an average of approximately 13 students per teacher.

Exhibit 14: Teachers – Public & Private

Share

Lower Student / Teacher Ratio

and Higher Tuition Fees does not

Guarantee higher Quality of

Education.

Many low tuition fee schools and

high teacher student ratio schools

have achieved an “Outstanding”

rating from KHDA implying the

importance of other factors which

has a positive impact on the

quality of education.


Tuition fees charged by private schools in Dubai vary significantly in terms of curricula, type and quality of facilities offered, and staffing standards.

Furthermore, Dubai has four (4) private schools that do not charge any tuition fees and certain private schools that charge a very nominal fee which could be as low as AED 1,725 per annum.

Whereas, a Grade 12 student enrolled at the most expensive school in Dubai is charged a tuition fee in excess of AED100,000 annually.

American schools command the highest range of tuition across private schools in Dubai, whilst IB schools attain marginally higher tuition when compared to British schools in Dubai (Refer to Exhibit 15).

Indian schools are more conscious of the tuition fee price point as they want to cater to the Indian population.

The exhibit below illustrates the average tuition range charged across the top curriculums in Dubai.

Tuition

According to DSIB’s latest evaluation report, private schools in Dubai are operating at a 90% capacity and have the capacity to enroll an additional 26,000 students across various grades prior to reaching full capacity.

Furthermore, British and Indian curriculum schools operate at the higher utilisation rates followed by the Private Ministry of Education and American curriculum schools.

Student capacity utilisation across Dubai’s private schools adopts a declining pattern, in alignment with the student population (Refer to Exhibit 9).


Exhibit 16: Private Schools Tuition by

Student Share

Exhibit 17: Capacity Utilisation by DSIB

Quality Ratings


2014

Private Sector Capacity Utilisation

Exhibit 15: Average Tuition Range Across Dubai Private

Schools by Curriculum

Source: KHDA 2013, DSIB 2014, Colliers International

Analysis 2014

- 10,000 20,000 30,000 40,000 50,000 60,000 70,000

British

American

Indian

IB

Annual Tuition (AED)

• “Outstanding” Schools in Dubai (as per DSIB rating) have proportionately fewer vacant places as compared with other private schools in Dubai (Refer to Exhibit 17).

• The highest number of student enrolment in Dubai is witnessed within “Acceptable” schools, with almost 44% of the student population within the private schooling system.

Over 59% of the student population, across all education cycles,

attending school in Dubai, pay tuition fees below AED15,000 (Refer

to Exhibit 16), which is mainly due to the high student absorption

nature of comparatively economic curriculums such as Indian,

Philippines and Pakistan.

Research & Forecast Report | Q4 2014 | Dubai Education Sector | Colliers International Research & Forecast Report | Q4 2014 | Dubai Education Sector | Colliers International 12

Key Insights &

Conclusions

By 2020 the

private education

market in Dubai

will require an

addition of 51

schools.

An approximate

annual demand

of 13 new

schools.


The private education market continues to grow in

Dubai, primarily due to demand from an increasing

expatriate base and the resultant preference towards

international curriculums, which consequently impacts

the market trends and the forthcoming supply. The key

insights are summarised below:

High Population Growth Rate

Colliers International estimates that the population of

Dubai is expected to exceed 3.5 million in 2020,

subject to maintaining the current growth patterns of

6.7% CAGR. However, should the projected growth

rate increase to 8%, due to various initiatives taken by

Dubai in the recent past, the expected population will

reach 3.8 million in 2020.

The current demographic landscape in Dubai supports

the steady development of the private education sector,

as the broader economy continues to grow over the

upcoming period.

1.32 Million in 2005

3.5 Million in 2020

Exhibit 18: Population Growth by 2020

Number of Private Sector Student

Seats in Dubai

The number of student seats in the private sector was

recorded at over 269,700 in 2013, which is expected to

increase to 315,500 in 2017, recording a CAGR of

5.5%, to reach a total of 360,000 seats by 2020, in

accordance with the strategy set by KHDA (Refer to

Exhibit 19).

269,700 student seats

in 2013


in 2017


in 2020

Exhibit 19: Dubai Private Sector Seats

Funding Options for the Private

Education Sector

A number of funding options are available to key

education players, with an option to explore being

successfully listed on regional or international

exchanges via IPOs, although none of the schools, so

far, are listed on the stock market.

Banks 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 contradicting banks risk appetite which

typically extends to terms between 5 – 7 years.

Typically real estate investments in the private

education sector generate yields of 9% – 11%, whilst

IRR’s for education operations range between 15% to

23%. Exploring the sales and leaseback model is an

alternative approach for established players to improve

returns through release of cash from noncore activities,

and directing capital into core business strategies, in

order to accomplish further growth.

The latest trend to obtain finance is either

through the sale of existing school buildings

to investors on a sale and leaseback basis or a

number of landlords / investors are willing to

build schools for operators to lease on a long-

term basis.

Attracting and Retaining Quality

Resources

• 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.

• Operators desperate to recruit appropriate

specialised staff have prompted a trend of poaching

teachers and management staff from competitors.

• Consequently, salaries have witnessed considerable

growth in the recent past across Dubai and the UAE,

which signals an effective international recruitment

process is imperative in order to achieve operational

success.


Size of Dubai’s Private Sector

Education Market

Colliers estimates that the value of Dubai’s private

schools’ properties reached US$ 6.1 billion in 2014,

which is expected to increase to US$ 7.1 billion by

2017, and is estimated to reach over US$ 8.1 billion by

2020 (Refer to Exhibit 22).

Size of the UAE Private Sector

Education Market

Colliers estimates that the value of the private

education’s property across the UAE is projected to

reach US$ 13.0 billion in 2014 and US$ 15.8 billion in

2017. This is estimated to reach US$ 18.8 billion by

2020 (Refer to Exhibit 23).

Exhibit 24: New Investment Requirement in

the Private Sector by 2020

Exhibit 23: Size of Private Sector Education

Market in the UAE

Exhibit 22: Size of the Private Sector

Education Market in Dubai

• Property (US$ 2.0 billion) Dubai

• Property (US$ 5.8 billion) UAE*

*UAE figures include the projected investment requirement for Dubai

13.0

15.8

18.8

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

2014 2017 2020

US

$ (

Billio

n)

*Dubai’s market size is incorporated within the projection for the UAE

• According to Colliers’ analysis, the requirement for new investments within the education sector across the UAE is expected to exceed US$ 5.8 billion by 2020.

• Furthermore, Dubai’s investment requirement is projected to reach over US$ 2 billion by 2020, as the Emirate advances towards accomplishing the education strategy objectives, set by the KHDA


in 2013


in 2017

1,010,800 student seats

in 2020

Exhibit 20: UAE Private Sector Student

Seats

Exhibit 21: New Student Seats Requirement in

the Private Sector by 2020

• 77,300 Student Seats by 2020 Dubai

• 298,000 Student Seats by 2020 UAE*

*UAE requirement includes the projected demand from Dubai

Number of Private Sector Student

Seats in the UAE

The number of student seats in the UAE’s private sector

was recorded at over 699,800 in 2013, which is

expected to increase to 847,600 in 2017, and

1,010,800 seats by 2020.

Total New Seats Required by 2020


Forthcoming Market Gap for Private Schools by Curriculum - Dubai

2013/2014 2019/2020

Total Market Gap = 90,300 Student Seats by Academic Year 2019/2020

5 British

Schools

2 Indian

Schools

1 Canadian

School

Excluding

2015/2016

Confirmed

Supply

Approx.

13,000

Student

Seats

Net Market Gap = 77,300 Student Seats by Academic Year 2019/2020

Results in

Considering market dynamics & average school capacity per curriculum

British American Indian IB Others

19 Schools 10 Schools 9 Schools 2 Schools 12 Schools

During the period between 2016 and 2020, the private education market will

require an addition of 52 educational facilities across multiple curriculums,

which translates into an approximate annual demand of 13 new schools.

Key

Message

360,000 Student Seats

243,700

Students

26,000 Vacant Seats

269,700 Student

Seats


About Colliers International

Colliers International is a global leader in commercial real estate services, with over 13,500

professionals operating out of more than 482 offices in 62 countries. A subsidiary of FirstService

Corporation, Colliers International delivers a full range of services to real estate users, owners and

investors worldwide, including global corporate solutions, brokerage, property and asset management,

hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking

and insightful research. The latest annual survey by the Lipsey Company ranked Colliers International

as the second-most recognized commercial real estate firm in the world.

colliers.com

Copyright © 2013 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been

made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are

encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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annual revenue

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under management

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and staff

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Contact Details

Mansoor Ahmed

Director | MENA Region

Healthcare Education & PPP

+971 55 899 6091

[email protected]

Colliers International | Dubai

Al Shafar Tower 1, Suite 1401

Dubai | United Arab Emirates

+971 4 453 7400

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Colliers International - Dubai Education Overview

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