Increasing demand for schools and universities from both expatriates and nationals is paving the way for growth in Dubai’s education sector.
While the children of international workers have long boosted numbers at private schools, a need for higher-level training programmes geared toward Emiratis has generated new opportunities for investment.
Schools reaching capacity
The number of pupils at Dubai’s private schools has more than doubled over the past 10 years, reaching 225,000 in 2012/13, according to the Knowledge and Human Development Authority (KHDA), which regulates private sector educational institutions.
Growth has been supported by Dubai’s expatriate workers, but the number of Emiratis enrolling in private schools is rising. In the last academic year, nationals accounted for 56% of attendees, up from 34% a decade ago.
The increase in enrolment is straining capacity. The overall utilisation rate (defined as the ratio of students to the number of places) reached 90% last year, ranging from 81.6% at high schools to 93.4% at primary schools. Supply is the tightest at UK and Indian curriculum schools, where the utilisation rate stood at 94% last year.
The KHDA expects continued growth in the medium term, calculating that an additional 90,000 seats in primary and secondary schools will be required within the next five years.
Universities adapting to labour market requirements
While private schooling growth has been largely driven by an increase in population, higher education is set to expand in the near term in response to the shifting needs of the labour market.
For example, the new Dubai Centre for Islamic Banking and Finance, a joint initiative backed by the government and the Hamdan Bin Mohammed e-University, is expected to support the emirate’s push to become a leader in Islamic finance, while Dubai International Academic City has been working with the private universities located there to launch their own Islamic finance programmes.
Demand for graduates in traditional areas of the economy, especially the energy sector, which remains dominated by expatriate staff, is also strong. A recent study published by Hays, an international recruitment agency, found that international employees accounted for 86.4% of the sector’s payroll. Growth in new energy segments, such as solar and nuclear, is also galvanising a search for new talent.
Recruiting nationals to work in the energy sector is a key objective among GCC governments, prompting some companies to hire promising candidates and train them in-house. While the practice may spell more work for businesses, it represents a potential opportunity for the education sector. The UK-based Heriot-Watt University recently opened the second phase of its £16.9m Dubai campus, which will offer several energy-focused courses.
However, the market is heating up, as Abdurahem Mohammed Al Ameen, the president of Al Ghurair University, explained.
“Even as the economy softened, the number of higher education institutions continued to increase and created a very competitive environment between schools,” he told OBG. “The long-term viability of the private higher education sector relies not only on the quality of the education but also on the cost-value proposition.”
The annual price tag for university students has reached an average of Dh35,000 ($9528). Universities attribute the price increases to higher costs, particularly a rise in rents at premises located in the TECOM-owned free zones. A member of Dubai Holding, TECOM Investments owns several of the emirate’s business parks, including Dubai Knowledge Village and Dubai International Academic City.
The government for its part counters that since university is not mandatory, tertiary education costs, like those of private schools, are dictated by the market. Its supporters are also likely to highlight the fact that education costs are on the rise elsewhere.
The government has supplied the building blocks for the private sector to play an active part in the education sector by providing a straightforward regulatory environment, similar to the set-ups in place across other areas of its economy. While competition looks likely to intensify, both private schools and higher education institutions should benefit from increased demand for their services in the coming years.