The Dubai education sector at a glance and what parents can look forward to as the sector aims to satisfy their needs.
It’s no secret that the education sector in the UAE, and particularly Dubai, is as competitive as it’s ever been. It’s also no secret that new operators entering the market must have different expectations in all aspects of the sector as a result of the increased competitiveness.
Historically, education and healthcare were considered ‘defence’ or ‘safe’ sectors for their ability to withstand economic downturns. This notion is currently being tested as supply and demand in certain segments of the market suggests that mid-market and affordable schools are in high demand, and premium schools have a surplus. It’s clear that nearly all parents are now getting their first choice of school, which historically has not been the case.
In 2018, fourteen new schools opened in Dubai and the majority of these schools have fees that are considered to be in the premium segment of the market. Certain locations of Dubai are now competition hotspots and these areas have seen a high number of schools open in the past three years with a similar offering, price point and curriculum.
One of the prevailing challenges that investors and operators face is the length of time it takes to plan and open a school. Business plans are often written two or three years in advance, and in that time, the landscape can change significantly. Investors need to be agile and responsive to market conditions and be capable of changing as they plan. Easier said than done.
A symbol of the new competitive climate
School advertising industry, which has reached an all-time peak in 2018 with over $13M spent on traditional advertising (radio, print, outdoor). This is a 26% increase from the same period in 2017. In 2018, we also witnessed the first “school fee freeze” a new directive from the Dubai Executive Council that stopped schools from increasing their fees for the 2018/19 academic year.
The amount spent on school advertising and the school fee freeze are symbolic of a new, and uncertain period that we are operating within. Coupled with the challenges for schools, Dubai has seen rental costs for apartments and villas decline by as much as 10% in the last year. This decline is expected to be a mid to long-term reality with more housing coming into the market. For consumers, all of the additional supply ultimately means they can be more selective.
I like to say that 2018 has been the ‘Year of Parent-Power’ and the ‘Year of Choice’ for both housing and schooling. As we look ahead to 2019, choice and purchasing power will continue as parents continue to shape the sector with their decisions but there may be other pressure points on the horizon that will become magnified as the sector evolves.
Established schools in popular catchment areas have historically benefited from the market conditions but in the future, their ability to satisfy parents will become a critical component of their success. A contentious issue amongst educators is the notion of customer service, as the term implies a corporatisation of education.
In 2019, parents’ satisfaction will be the hot topic amongst educators, as new schools ramp up their financial incentives to attract existing demand in the market. We are seeing parents vote with their feet more frequently and move between schools which benefits new entrants.
Certain areas of Dubai have seen a spike in their population. As a city, there are many residential developments launching in 2019, and the city is set to expand again. With attractive rental conditions, and incentives to move, families will have even greater choice in the housing market. This may result in less travel time for parents, and the localisation of schools and communities.
The Future Outlook Of Schools
With Expo 2020 around the corner, and a level of uncertainty on the horizon, school operators need to find new ways to satisfy their existing parents. Schools must strike a balance between delivering on existing promises to parents and recruiting new students.
In recent years, we have seen new schools enter the market at much higher price points than their established competitors, so in theory, they can circumvent the potential implications of their inspection rating. Established schools do not have this luxury, and schools that have operated at mid-to-low level price points have only been able to increase in-line with the educational cost index.
Affordable schools have seen a very big response from parents in Dubai in the past year. GEMS Founders, Al Mizhar, have fees ranging from AED 20,900 ($5,688) to AED 29,000 ($7,896) per year, yet they opened with 1500 students in September, the most of any new school in 2018.
For new operators entering the market in 2019, it has to be the ‘Year of Agility’ as the market will demand new approaches to HR packages to retain teachers, new recruitment strategies to attract the best international talent, and new ways to use technology as a resource within schools to support the curriculum.
In 2019, we may also witness the ‘Year of Parent Satisfaction’ as schools and parents re-evaluate what it means to belong to a community. Loyalties will be tested in the new competitive climate and teachers must be equipped with communicative tools to meet and greet parents in ways that acknowledge the prevailing power of their position.
In the next two years, parents in Dubai will have choice at every price point, and mid-priced schools might be the choice that enables expatriate parents to plan for a longer future in Dubai. This does, however, mean even greater competition is on the horizon and parents will have the capacity to move seamlessly between price points and curricular in every location within the city.
SHAUN ROBISON
Director, Education Intelligence Group
Connect with Shaun Robison on LinkdIn
How many years’ experience do you have in the educational sector?
.I have 11 years’ experience in the UAE education sector
Why did you write on the topic of ‘education’ in Dubai?
Education is my passion and I care deeply about improving all aspects of the sector in the UAE. It’s important that we address the challenges head on and we’re honest in our assessment of the sector and the solutions to the problems we face.
In just a few words, describe the UAE real estate market in 2019
Highly competitive on every level.
This article was originally published in Trends Report, Vol 5.
