A profitable lesson: Private institutions are drawing the attention of financiers

The UAE’s private education sector is rapidly expanding and Ras Al Khaimah is no exception – as its population rises against a backdrop of economic development, the emirate has seen a number of new private schools open of late, particularly in the post-secondary segment. A focus on science, technology, engineering and maths (STEM) training has benefitted the K-12 and post-secondary segments.

Private Market Expansion

Although all Emiratis are provided free, state-funded education up to the post-secondary level, the UAE’s expanding expatriate population is unable to utilise this system and has thus driven growth in its private school market. According to a July 2014 report published by Alpen Capital, the UAE’s population is expected to rise to 9. (https://sofy.tv/) 9m by 2016, of which 88% will be expatriates. The value of the UAE’s private education sector stood at $1.9bn in 2013 and is expected to rise. The RAK Department of Economic Development (RAK DED) reports that the emirate’s population in 2015 stands at 438,000, compared to 267,000 in 2009. This, coupled with the emirate’s lower costs of living and doing business, bodes well for investors in the private education sector. Private school growth is outpacing public school growth, with RAK DED reporting private K-12 enrolment rose by 13% to reach 21,398 pupils in 2013/14, nearly 40% of the emirate’s 55,008 K-12 students, compared to 2.6% enrolment growth at public schools. In the post-secondary segment, the number of non-Emirati students attending post-secondary institutions rose by nearly 18% in 2013, from 1067 to 1256 students, according to data from the Ministry of Higher Education and Scientific Research.

Growth Strategy

The government of RAK is targeting expansion of the K-12 and post-secondary segments through private sector collaboration, reporting in 2013 that it was negotiating with US-based colleges over potential international campuses. The RAK Free Trade Zone’s (RAK FTZ) education zone offers investor incentives, while setting up a new business there costs less than a third of what it does in Dubai’s Jebel Ali Free Zone. “There are many reasons to develop this emirate into an education hub: it’s quiet, economically sound and the cost of living is a fraction of what it would be in Dubai,” Sudhir Kartha, CEO of Western International College (WINC), told OBG.

Investment Destination

Investment in RAK’s education sector has been rising as a result. Notably, in February 2015 Google announced that it had built its first-ever UAE-based Innovation Hub in RAK, which will provide STEM-focused training to teachers and K-12 students. In the post-secondary segment, RAK FTZ’s Academic Zone remains the most popular location for new academic investment. Several institutions have established a presence in the zone, including India’s Bharati Vidyapeeth University; the University of Bolton, which partnered with WINC to offer UK-accredited business, engineering and construction degrees in 2008; and the Vatel International Business School for Hotel and Tourism Management.

Recent developments indicate the rising value proposition of private education in RAK – CORE Education unveiled plans to invest $2m to take over the existing RAK Institute of Engineering in 2012, and Pakistan’s Abasyn University inaugurated its offshore campus at RAK FTZ in June 2014, with tuition fees costing around 35% less than similar schools in Dubai. The UAE’s rising demand for a STEM-trained workforce has also benefitted this segment; at Bolton University’s RAK campus, Kartha said students’ post-graduation employment prospects are far more promising than in many Western markets, as a result of a growing number of opportunities presented by major national development projects. “RAK is one of the more industrialised emirates and our students have access to tremendous opportunities here. Half the world’s cranes are in the UAE, so anything construction-related is in high demand,” he told OBG.