The current regulatory environment affecting schools in Dubai is creating a 'funding gap' which is hindering investment in the sector, according to the Dubai Private Schools Group (DPSG).
According to the DPSG, if this gap is not filled there will be an impact on the availability of affordable schools in the emirate, a repeat of an earlier warning from Sunny Varkey, the CEO of GEMs Education who noted: "If we are not sustainable as a business, we can’t build more schools to help children.”
As an organisation representing private schools and school operators, DPSG clearly has an investment in how fees are regulated. The group was formed in 2009 'as part of the Chamber's commitment to represent, support and protect the interests of the business community in Dubai.' In total 31 schools in total are members including GEMs Education, Innoventures as well as JESS, Dubai College and Choueifat.
The members of DPSG have been in discussion with Dubai Chamber about a new approach on how education costs are regulated.
“In appeals first to the Ministry of Education, and later to Knowledge and Human Development Authority (KHDA), we highlighted a potential and growing issue should things not change. All Dubai schools face this issue, even many that have served the community for decades,” said a DPSG spokesperson.
The group has identified three key areas that need to be addressed:
“This framework has failed to take into account the three most significant costs facing schools in Dubai: teacher salaries, rents for the land and school buildings, and capital investment in technology and innovation,” the spokesperson added.
Another area that they believe needs to re-examined is the current restriction on the rate of return for new schools.
Since the new school fees structure defines a maximum rate of return on school investments the group believes that many investors are discouraged from building new schools.
“It is crucial that people who take risks investing their money and giving their personal guarantees to banks be able to make a reasonable return that will allow them to repay loans and costs, and encourage them to invest in building new schools,” the spokesperson noted.
Based on data obtained from 84% of Dubai’s private schools released by the KHDA, the latest figures show that salaries make up 60% of a school's total expense. The remaining 40% comprises rent, maintenance, electricity and water.
The KHDA’s recently published Dubai Private Education Landscape report also shows that 42 per cent of the student population currently pay less than Dh10,000 in annual tuition fees, however it also notes Dubai's schools generated some Dh4.7 billion in revenues in the last academic year.
New school places in Dubai also rose faster than the number of students, a trend likely to continue into 2014/15. However it is also clear that a majority of schools being developed are currently targeting the distinctly less affordable, premium sector.