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Education Business Group reveals operating headers in private school cost structure

Dubai, UAE – October 2022: Education Business Group (EBG), a non-profit formed under the umbrella of the Dubai Chamber of Commerce and Industry (DCCI) servicing 53% of the city’s private school student cohort, revealed today the operating cost parameters which drive the tuition fees of private schools in Dubai.

As Dubai continues to attract more global expatriates, the demand for private schooling is increasing, with persistent growth in new enrollments seeking high-quality education. Today, the city boasts 215 private schools servicing 289,019 students across 185 nationalities. Commenting on the topic, Amit Kothari, Executive Committee Member, Education Business Group said: “With the academic year in full swing, it is important we raise awareness on the various elements of cost that private schools incur, as this is what ultimately defines tuition fees. Private schools in Dubai have consistently raised the bar in providing high-quality and diverse curricula to suit the different needs of the community, while adapting to the latest technologies and ways of working.”  

Capital Costs

A typical private school in Dubai costs between AED 50 million to AED 350 million to construct depending on its student capacity, built up area and quality of finish; this excludes the value of land which tends to be leased or freehold. Private schools in Dubai are funded either by private equity, REITS, sovereign wealth / pension funds or family offices and most schools draw down bank loans to supplement their capital structure, so as to be able to invest upfront in the land, building, furniture and fit out to create enough capacity to keep up with the burgeoning demand for private school seats in the city. Without tapping into these sources of capital, schools would not be able to generate enough cash organically to open at the rate at which they are required, to serve various communities that mushroom up across the city. Private schools in Dubai are not entitled to any subsidies, they are subject to commercial market rates for all input costs including but not limited to costs of various sources of capital described above, costs of acquiring, constructing or leasing land and building, costs of utilities, sharing of public infrastructure costs, rates and taxes.

If schools do not generate a reasonable return, they will not be sustainable hampering their ability to reinvest in the continuous improvement required to maintain the high standards of educational outcomes. This cost base comprises cost of staff, both academic and non-academic, academic resources, rent, utilities, student related expenses, marketing, curriculum development and facility upkeep.

Besides a lack of subsidies, what makes schools in Dubai more expensive than other markets?

Teacher Costs

Many of these cost heads are higher in Dubai compared with other markets, which is what leads to the overall tuition fee of a school being driven higher. To deliver the high-quality educational outcomes expected from our global parent community, schools must recruit and retain the best talent. This leaves schools competing with other International (expat) schools around the world, and a limited teaching talent pool to choose from. Dubai is the city that arguably offers the most diverse private schooling opportunities in the world. Add to that the costs of visas, relocating, training, developing and housing staff. Furthermore, with Dubai’s multifaceted culture, it is important for schools to consider customers of different nationalities, background and aspirations, and to respond with a diverse range of curricula across age brackets; which again requires very specific skills amongst teachers who need to be sourced from very specific markets to be able to deliver to the appropriate pedagogical practices.

Compliance & Regulations

As the UAE prepares for the new corporate tax set to take effect in 2023, schools in Dubai have also welcomed the introduction of a structured tax regime. With this, private schools envision much-needed support from public entities to look into reasonable reduction of governmental fees on the education sector. The easing on certain administrative costs can span across visa costs for teachers, fee adjusted rents (i.e., lower fee charging schools would pay lower rents enabling a more economically diverse education portfolio across the city) or preferential costs of utilities for education institutions. Together with key stakeholders, schools in Dubai are also looking to promote and recognises Emiratisation efforts and ensure they are sustainable.

Aspirational Student Outcomes

As the UAE continuously works towards a sustainable educational future, Dubai’s private schools remain one of the best private school systems in the world. Dubai aims to be a leader in all matters of human capital development, and develop into a Knowledge Economy. These aspirations naturally come at a cost. Comparisons of standardized test scores (such as PISA and TIMMS) of Private Schools in Dubai against their peers in other countries are testament to the fact that Private schools are on track to realizing these aspirations, but again delivery of education to such great finesse comes at a cost and this cost is borne by the customer.

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