Changing dynamics: Private schools are proving popular with Emiratis and expatriates alike

Rising incomes and population growth are driving increased demand for private education in Abu Dhabi. From 2007 to 2011, enrolment in private schools increased 34.5%, and the trend is set to continue. Private schools, from local providers to global corporations, are expanding their footprint in the emirate.

Salem Al Noaimi, CEO of Waha Capital, told OBG, “We see high potential in education. Rather than attempting to address increased demand for private education itself, the government has actively engaged the private sector to fulfil the needs of the market. This represents a marked shift in policy and demonstrates the government's commitment to provide greater opportunities for private sector investment.”

Sector Trends

 The increase in Abu Dhabi’s expatriate population has been a boon for private schools, where more than two-thirds of the students are foreign nationals. The immigrant population grew by an average of 9.1% annually between 2005 and 2012. Furthermore, nationals are increasingly choosing private alternatives to government schooling: 67% of nationals attended public institutions in 2011, down from 74% in 2007. Abu Dhabi’s private schools differentiate themselves by their facilities and fees, as much as their curriculum and language of instruction. Investors have favoured the top-tier institutions, which usually offer UK, US or international curricula along with expansive facilities and a range of extracurricular activities for tuition fees of above Dh20,000 ($5444) per annum.

Players

 Among the firms expanding at the top end is Aldar Academies, 100% owned by Abu Dhabi’s biggest developer, Aldar Properties. Currently operating six schools, the firm is opening another four in the coming years. Grouping the academies with other investment properties like hotels and leisure facilities, Aldar’s financials cited a 10% year-on-year increase in revenue in the first quarter of 2013.

Another significant player in the sector, GEMS Education Solutions, a Dubai-based firm operating the largest network of private schools in the world, opened two new UK-curriculum schools in Abu Dhabi in September 2013. In April 2013, the privately owned firm raised $545m for new investments across the globe over the next three years, and financial media has reported GEMS Education Solutions plans to go public in 2014.

Abu Dhabi-based Royal Group runs a number of UK-curriculum schools in the emirate and plans to open a branch of the elite British Cranleigh School in 2014. The 7-ha campus, designed to serve more than 1600 students aged three through 18, will be Abu Dhabi’s largest school. Also in 2014, Repton Academy, a 456-year-old British independent school, will open a branch in Abu Dhabi. “In the next two to three years, you will see the market for top tuition fee schools get saturated," Nilay Ozral, CEO at Aldar Academies, told OBG.

The key features distinguishing quality mid-priced and top-priced academies are extracurricular activities and facilities. While the salaries of native English-speaking or Western-trained teachers increase costs in top-tuition schools, mid-priced institutions may employ a mix of native and non-native English speakers and enhance the quality of teaching through in-house training and continuing professional development.

Governmnet Support

 The Abu Dhabi Education Council (ADEC) supports private sector expansion in the form of free land, subsidised facilities or even seed investments. At a January 2013 conference for investors in private education institutions, Abu Dhabi highlighted the need for investment in more rural locations and in lower-fee schools. “With ADEC support we plan to open schools in remote locations and are committed to doing so in the outskirts of Abu Dhabi and Al Ain,”

CEO of GEMS Education Solutions, Chris Kirk, said at the event. “We plan to open seven new K-12 schools across Abu Dhabi which can accommodate up to 30,000 students. The schools will be across the board in terms of curriculum and socio-economic diversity [of pupils].”

While the market for top tuition schools may soon be saturated, the market in Abu Dhabi continues to present opportunities for middle-tier private institutions.