Education Sector in UAE Witnesses Intense Competition
20Aug
Ed InvestmentPre K to K-12

Education Sector in UAE Witnesses Intense Competition

Schools in the UAE could find themselves in a price-and-quality battle to attract students as competition within the nation’s education sector hots up.

After years of near-constant growth and an infrastructure boom in the field of education, a flood of new schools across the UAE means parents have more choice yet are seeking value as salaries become squeezed in a tougher economic environment.

While education analysts do not see a so-called “expat exodus” leading to empty spaces in UAE classrooms, they believe rising living costs and uncertainty in the job market mean schools will have to carefully consider their price structure and show they can continually drive up standards if they are to survive. As the sector becomes increasingly competitive, some schools are taking heed by turning down the option of raising tuition fees.

Mahboob Murshed, managing director at Alpen Capital (ME), said: “The UAE education sector — which has in the past seen a phase of robust growth in student enrolment coupled with an expansion of infrastructure — is now entering a phase of transition.

“For the first time, there are concerns of oversupply as demand struggles to catch up with supply, with the entry of a large number of new schools in the past few years. The competition among private players has intensified over the years with new schools offering incentives and discounts to attract students.

“The increased competition has ensured a greater focus on quality of education, with players focusing on continuous improvement to enhance their ratings.

Any drop in enrolment numbers has a direct impact on profitability of schools and newer entrants are at a greater risk as compared to older and more established schools. We expect to see consolidation in the sector and only those with a high-quality offering in their price segment will be able to maintain and enhance their profitability.”

While concerns have been raised that tougher economic times mean that some expats will leave the UAE, with a resulting impact on school numbers, WorldOmeter — one of the world’s leading sources on global population growth — estimates that the UAE’s population will continue to expand at a net rate of 1.5 percent.

But according to Mansoor Ahmed, director for health care, education and public-private partnerships at Colliers International, the potential client base for schools is only one factor in whether they thrive or stagnate. He feels providers need to look at “the composition of the population,” which is becoming more mid-income than high-income, and make “affordability” their focus.

“The government in Dubai has already taken a step in this regard, by freezing private school fees in 2018/19, while the private sector is also moving in this direction by introducing more and more affordable schools,” he said. “Dubai is expected to maintain its status as one of most buoyant private school markets in the world.”

Read the full article on Al Bawaba.

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