More than 1,000 schools will be needed in five of the region’s biggest cities by 2020, according to a new report.
Some 1,100 new schools are required in Dubai, Abu Dhabi, Jeddah, Riyadh and Cairo, according to the JLL property consultancy.
It represents a big opportunity for developers and investors, says JLL.
The consultancy said that about 350 schools are expected to be provided by the private sector.
The increase is required because the total school age population within these cities is expected to grow by 1 million by 2020, according to the report. It argues that 97 new schools are needed in Abu Dhabi and Dubai, with 58 of these likely to be provided by the private sector.
Dubai is expected to need 53 new schools, 36 of which will be provided by the private sector, while Abu Dhabi needs 44 – half of which will be private schools.
Craig Plumb, head of research at JLL Mena, said: “The requirement for around 350 private schools presents significant opportunities for real estate investors, developers and builders.
“The education sector has sparked the interest of many real estate investors right across the Mena region. Private equity firms in particular have been very active in recent years, and they will continue to play a pivotal role in the expansion of the private education sector here.”
Regional property investors have typically focused on residential, office, retail and hotel properties, but alternative investments such as education, health care, warehouses and student housing have gained ground in recent years.
Mr Plumb said this was due to a “shortage of quality income-producing assets in traditional sectors and declining returns in some locations”.
“Both retail investors and institutions are seeking greater exposure to non-correlating alternative investments that provide consistent income with low volatility.”
According to the Federal Competitiveness and Statistics Authority, 75 per cent of students in the UAE now attend private schools.
A report prepared by Abu Dhabi Education Council last year showed that private schools in Abu Dhabi earned close to Dh3 billion in profit over the preceding four years.
About Dh2.3bn was invested in 45 new schools in Abu Dhabi between 2010 and 2015.
In Dubai, Emirates Reit has made a number of investments in the sector, buying the Gems World Academy from operator Gems International in 2013 and investing Dh208.3 million in the new Jebel Ali School that is being built at the Akoya by Damac project off Umm Suqeim Road.
Sylvain Vieujot, the chief executive of Emirates Reit, said that education sector assets now account for 24 per cent of the current income generated by its portfolio, “bringing very stable rental income and long-term, secure cash flows”.
“Demand for high-quality education remains robust and we recognise the long-term strength of the sector and its importance to the overall economy,” he said. “We continue to be interested in investing in the sector.”
Follow The National’s Business section on Twitter