Owners Have Got School Fees "Wrong" - Report

According to a new report by Property Finder and the Education Intelligence Group (EIG), investors in new schools have been failing to do their homework, with the result that new school supply in the UAE is not priced in accordance with the income levels of residents in surrounding communities. The report also argues there is "oversupply in both the residential [real estate] sector and the premium segment of the education sector in Dubai".

The report notes that education and real estate have been two of the largest expenses families in the UAE have had to budget for, however recently, school operators have been forced to offer significant discounts and incentives to parents as a result of increased competition for students.

Despite additional seats coming up in already established schools, 16 new schools opened in 2018, adding an additional 25,000 more seats. Only two of these schools could be defined as “affordable”, with the remaining schools offering fees within the premium or mid-market segment. The report notes that the majority of new supply which has entered the market is in locations where there are existing schools offering similar price points and curriculum, exacerbating the fight for students.

The average annual asking price of new schools entering the market in 2018 was AED 55,509, an increase of AED 14,695 from 2017.

The report argues that there is still space for "agile" investors in new schools, but he she or they would need to recognise that pricing has, for the most part, been wrong on most new launches. "Most incoming school supply is not priced in accordance with the income levels and demands of residents within the immediate and surrounding communities... Historically, failing to consider the right data is where the mismatch occurred and continues to persist," Lynnette Abad, Director of Research & Data, Property Finder told WhichSchoolAdvisor.com.

Today, the joint EIG, Property Finder report notes, just about every parent can get their first choice of school. Parents not only have a wide variety of curricula and price point within their immediate locations, but are now being incentivised, with free uniforms, free transport and extra-curricular activities included in the school fees.

“We’re now at the point where investors really have to delve deep and explore what residents in Dubai really want," according to Shaun Robison, CEO of the Education Intelligence Group. "The overarching message of the report is that we all need to rethink and redefine our perception of what it means to contribute to this community.

"New real estate, and new schools, need to meet real needs."

More information on the report can be found on the Education Intelligence Group's web site.