DUBAI// Schools are likely to face higher operating costs, lower profit margins and a scramble for the best teachers, according to education experts.
An extra 175,000 school places are expected to be created in the UAE by 2020, 90 per cent of which will be in the private sector.
The findings from the PwC Middle East published Understanding the GCC Education Sector, Country Profile: UAE report, states the attraction and retention of pupils will become a priority for schools.
“Existing schools with a good track record and a history of positive achievements will already have a solid school population and most will have achieved a critical number of students to make themselves financially viable,” said Clive Pierrepont, director of communications at education provider Taaleem.
“What the market is watching closely is how the new entrants to the UAE are going to fare when the projections in their business plans fall far short of their targets due to the current reality of a surplus of places, especially in the premium school sector.
“We have already seen ‘Closing’ or ‘For Sale’ signs appear on schools that are relatively new to the UAE.”
Dubai is predicted to need 74,500 additional seats in 50 new private schools by 2020, with 62,000 more seats in 52 new private schools required in Abu Dhabi over the same period, said the report.
The study found almost all of the emirates, led by Dubai, are seeing growth in private K-12 enrolment, with the exception of Fujairah.
But this in turn will require more investment in good quality teaching.
“The quality of a school never exceeds the quality of teachers. The single most important feature in a successful school is a highly talented, motivated and effective staff,” said Mr Pierrepont.
“There is a worldwide shortage of teachers, we compete in a global market to attract and retain the very best of them, with the right experience, a proven track record and specific skills.”
To employ the best teaching talent highly competitive rates of pay and benefits must be offered, resulting in 70 per cent of Taaleem’s school costs allocated to staffing, he said.
This rapid growth will challenge the sustainability of schools who do not have a long term plan, he warned.
Teacher recruitment was a concern shared by Judith Finnemore, of Focal Point Management Consultancy.
“If the cost of living rises, the teachers who are not paid so much will not come because remittances will decrease,” she said.
“Teaching is not such an attractive proposition anywhere anymore and you cannot ‘steal’ teachers from western countries indefinitely.
Natasha Ridge, executive director of Sheikh Saud bin Saqr Al Qasimi Foundation for Policy Research, believes schools will have to pay more to attract good teachers which in turn will increase costs and tuition fees.
“Operators could see a reduction in profit margins, so those who are expecting big returns may be disappointed,” she said.
An oversupply of places may result in lower fees and overall there will be more choice for parents.
The education market may see instability if new schools are not successful and then close, and regulators should make sure new entrants into the market have robust business plans, said Ms Ridge.
However she added there was an acute shortage of good quality schools below the average annual tuition fee rate of Dh40,000.
Dubai will see UK and Indian curriculum schools continue to dominate but International Baccalaureate curriculum schools are becoming an increasingly popular, according to the PwC report.
In Abu Dhabi, Indian and American curriculum schools are leading growth but British schools remain popular choices.
Formal education in pre-kindergarten is being encouraged by the government, which could see a significant increase in the number of providers.
According to the report if the UAE hit the OECD average participation rate of 33 per cent for 0 to two-year-olds by 2020, PwC estimates over 81,500 more seats will be needed.