With an increased number of seats, annual fees still quite high
What are the two largest expenses for families in the UAE? Housing and schooling. Although house prices and rents are dipping, there’s no such luck when it comes to school fees. A new ‘Knowledge Economy Report’ co-authored by Property Finder and the Education Intelligence Group has revealed that school fees in Dubai do not match the income and demand levels of the city’s residents.
In a 2018 HSBC report, of the countries surveyed, the UAE ranked as the second most expensive country when it came to education. Our report not only confirms this is still the case even with an increase in the number of seats, but also takes a deeper look at the mismatch that exists between income levels for Dubai’s residential communities and how that works against schools.
In recent years, several schools in Dubai are dealing with empty seats as a higher number of families are relocating back home or moving their children to more affordable schools, according to the report.
To make matters worse, 16 new schools opened in 2018, adding an extra 25,000 seats. However, only two of these schools can be tagged “affordable”, with the remaining schools offering fees in the premium or mid-market segment, states the report.
Parents also had to shell out an average of AED 55k in fees in these new schools that entered the market in 2018. This was an increase of AED 15k from 2017, according to the report’s findings.
We’re now at the point where investors have to delve deep and explore what residents in Dubai really want. Investment expectations have to shift towards longer term goals, as parents clearly want to stay in Dubai and educate their children for the long termShaun Robison, CEO of the Education Intelligence Group
Adding to the mismatch, the majority of new schools are in locations where there are existing schools offering similar price points and curriculum, the report adds. For school investors, it’s no longer a ‘build and they will come’ scenario. They need to be careful that the school’s price point is aligned with the surrounding community. Until school operators realign their expectations with reality, schools will find it tough to fill seats and cater to parents’ expectations.
“It is imperative to look at all the various data sets when making these key decisions and working on feasibility studies, especially when trying to project three, four years down the road. Asking price data, transaction price data, demand data, supply data and demographic data are all key data sets when assessing what type of schools to build, where and what their price points should be. Historically, failing to consider all this data is where the mismatch occurred and continues to persist, and we have dissected each area, in depth, in the full report and made recommendations for a remedyLynnette Abad, Director of Research & Data, Property Finder
However, in some good news for parents, school operators are now offering significant discounts and incentives. Schools are attempting to woo parents with free uniforms, free transport and extra-curricular activities included in the school fees. On top of this, just about every parent can get their first choice of school in 2019.
It is time that schools adapt to the new market reality of affordability and bring changes in the fee structure. With house prices and rents declining across the board, reducing fees without compromising on quality would be the next logical step for school operators and investors looking at the education space.