The statistic is revealing for a number of reasons.
Firstly, it shows just how picky GEMS specifically, but Dubai more generally can be in cherry picking the best teachers, even as the world claims the pool of highly qualified teachers is shrinking.
Secondly, it is a very real manifestation of how Dubai specifically, and the UAE in general, is booming – and in the education space at a level not seen since the period between 2013 - 2018.
GEMS Education has just held its largest ever 'Awareness Day', hosting 400 more new teachers than its previous record number of 1,800. And whilst some of those teachers will have been replacements, Dino Varkey told WhichSchoolAdvisor.com that “a significant part of what we see amongst the 2,145 is growth-related”.
“We have not seen growth rates like this across the system since 2014-15 and 2016-17. The only other time I can think of growth rates like this you have to go back to 2004.”
No business takes on new staff unless there is a strong business imperative. Alongside rent, teachers are a school’s biggest cost, and therefore its chief obstacles to profit. Operators are adding new teachers only because 2023-2024 will also welcome a record numbers of students – their core revenue source.
According to Mr Varkey:
“At an absolute level we have the most teachers that we have ever had because this is the most students that we've ever had in our network. Ever.”
In part because of Covid, UAE operators have been unusually quiet over the last few years in terms of new build. GEMS has been remarkably so for a school group known for its entrepreneurial bent. In fact, this year sees GEMS Education opening its first school in over three years: GEMS Metropole Al Waha (MTW). MTW will offer places for an additional 3,500 students.
Growth in student numbers is therefore being accommodated by existing schools. While school groups like GEMS have increased capacity over the last year (GEMS with Jumeirah College and Founders Mizhar) capacity is being filled much faster than it is being created. This suggests, somewhat worryingly, a crunch in supply is ahead - should the UAE continue on its current, incredible growth trajectory.
Said Mr Varkey:
“Do we have the places at all the right levels to be able to keep up with growth in demand? Honestly no: Schools are filling up much, much, earlier than they have ever done.”
“We've never been as high in terms of our capacity utilization as we will be this September.
“This means that to match demand with supply directly is getting increasingly hard."
Mr Varkey estimates that the KHDA will report utilization in the high 80% in terms of school places in Dubai when it reports the figures, usually in the final quarter of each year (or first quarter of each academic year). GEMS itself will hit a capacity utilization of over 90% in 2024.
“If you have been an Outstanding rated school, or the highest rated school within a particular segment, you are literally going to fill up for the following year within the first quarter of the academic year. So, for example, I would expect Wellington International School, GEMS Dubai American Academy, or Jumeirah College to be full for September 2024 within the first academic quarter of the school year – in other words some time between September 2023 and January 2024.
So, if you’re an expat arriving in February 2024 and want to get into a top school..?
“It is a difficult message for families that are really looking for high quality schools. I get requests every day for these schools. I'm like, “I will do my best but the school was full in February or March”.
Peak demand, says Mr Varkey, is in the premium school sector for higher income groups.
“Our premium and higher price point schools are at very, very high levels of utilization. Premium schools within our network are going to be in the very high 90% utilisation by the end of 2024.
“This isn't just for GEMS: The UAE has benefited from the higher income relocation of wealth from both the East and the West. That's very, very clear. All premium schools are doing well as a result."
According to education research company EdStatica.com, Nord Anglia School Dubai, a benchmark school when it comes to premium schools in the UAE, is now full across all year groups, despite adding places for 750 new students for 2023/2024. Its capacity now stands at 2,850. The incredibly popular Safa schools have also hit capacity in certain year groups with enrolments up 18% at Safa Community and 21% at Safa British. According to Ms Poonam Bhojani, CEO, Innoventures Education: “Student enrolment has gone up by 16 per cent across its schools, as compared to the same time last year, with an increase of 20 to 40 per cent across certain class groups.”
According to The National newspaper, Brighton College Dubai has seen a 25 per cent increase in pupil numbers since last year, and had a 20 per cent increase in the number of teachers.
Dubai, says Mr Varkey, has created a safe, enterprising-enabling environment, with a great infrastructure. “When High Net Worth families need to, or just want to, move, they say, “OK where can I go?” In general there are four hubs for them: Monaco, Singapore and Miami - but, above all of these, sits Dubai."
“The reason Dubai is at the top of this list is that most of those places just don't have the capacity to be able to take these people and or families…”
According to by research by Henley and Partners the UAE did top the list in 2022, and is expected to still be in second place for 2023, just pipped by Australia. The UAE will see an additional 4,500 families of HNW families – those with Net assets of USD 1m or more.
But will Dubai have the capacity going forward? The answer depends very much on one word: lag, and more specifically the amount of it between demand and new supply – which comes primarily in the form of new school builds.
In Dubai, there were just seven new schools opening in 2023/4, and so far there are just two confirmed for 2024/5. Unless school operators have new schools they have not yet announced but are secretly working on (not unlikely), given the two to three year time frame required, we cannot expect a spike in new schools to facilitate the UAE’s growth before 2025/2026.
GEMS itself has one new school, Metropole Al Waha, coming online this year, and, so far, has announced just one Founders school in Masdar, Abu Dhabi, insufficient to meet the predicted rise in the UAE population.
Of course GEMS is not the only story in town. The following is research company's, EdStatica's list of the new schools opening, officially, over the next three years.
We are also aware that two of Dubai’s most respected Not For Profits plan new schools – one certain, one less so. There is no doubt that more schools will continue to be announced, and existing ones will add capacity, but on face value, the rate of schools coming online is insufficient for the expected growth – which to us suggests someone, or perhaps quite a few someones, need to get busy.
This is especially because of D33.
Dubai’s D33 agenda [a ten-year goal - Dubai 2033] aims to double the size of the Dubai economy. In order to achieve that, [and the population growth it requires], a number of things need to happen in support.
One of those things is more schools.
Said Mr Varkey:
“I'm quite conservative, so even if we only achieve 1/3 of the D33 ambition, we are going to need to double the size of the private school market. In 10 years. We are currently serving just over 300,000 students. We are going to need schools for 600,000."
That means, in Dubai alone, 30,000 additional places need to be coming online each year. With an average school size of 1,500, that means 20 new schools every year for the next 10 years.
The fact that GEMS Education is at over 90% capacity cannot be seen as anything else but a failure. Great for short term profit, but poor in terms of matching market demand. GEMS’ CEO himself admits he likes to see capacity in the mid 80s. Anything higher, or “more efficient”, means that you will be turning some students away.
The GEMS boss does not see this as a fault of the company's decision-making process regarding investment, however.
“What I would say is this: If we hadn't had Covid-19, [things would have been different]. We typically build two years ahead. The virus stalled the investment cycle by a couple of years. So, no I don’t think it’s a failure of ours:
You would have had to be a genius, in the middle of 2020-2021, to have said now is the time to put two hundred million dollars down on a new school for when the cycle turns.
Covid-19 caused not just us, but pretty much everybody, to pause on what their original investment cycle would have been.”
Mr Varkey does expect there to be a surge in investment to make up for the short fall in new builds. "You are going to see the entry [of new investors]. People [and institutions] that typically aren't in our part of the world are coming in – the likes of Cognita, for example."
However, there are obstacles to this – in the main regulatory according to Mr Varkey. More could be done by Dubai, and the UAE, to attract the investment needed to support growth.
“Some investors are waiting for more visibility on what's going to happen with the regulatory environment [in particular regarding fees]. The decision in March was helpful [which allowed schools to increase fees for the first time in four years], but investors want to see something that’s more predictable – not on and off.
“Perhaps there have been good reasons [why the Educational Cost Index rule has not been applied in] certain years, perhaps there haven't been such good reasons in other years, [but] it has been volatile.
“An Educational Cost Index based system (which matches inflation in the education sector to allowed fee increases] is fine, [as long as it will be applied consistently].
“[If it is applied consistently] we will [only then] see an influx of investment into the sector, at the rates again that we were seeing between 2013 and 2018."
Despite the gripe about the inconsistent ECI application, which GEMS’ CEO is quick to point out does not affect its investment decisions, Dubai’s future, he predicts, is very bright. One of the main reasons for this is that the UAE is incredibly attractive for investors:
“GEMS’ capital is finite. My board and our investors want us to look at deploying that capital in the most responsible way.
Mr Varkey continues:
“As we look around the world, the buoyancy, the economic ascendancy of what we're seeing in Dubai and the UAE, is pretty unique. If you overlay that as far as private education is concerned, it’s very difficult to look away from the UAE. Nowhere - not the UK, continental Europe, Southeast Asia or the KSA, will generate as much, or as much predictably, as an investment that we put into the UAE.
“[Yes,] of course the pace and rate of growth will change - it will be slower in some years over others, but the fact that it's going to grow is pretty undeniable. And you cannot say that about most places. Few countries can offer the same level of security, stability, infrastructure, or the same positive, enabling environment as the UAE.”