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Education Sector in UAE

Understanding Middle East Education

The UAE is one of the more mature education markets in the region and remains a draw for investors, providers and students. Its scale and ambition remain undimmed, but what is the reality on the ground? What do the trends over time tell us about the education sector by segment, and what are the key differences between its main markets?

Education Ecosystem

Key influences on private provision in the UAE

In the 2017-18 Global Competitiveness Report, the UAE’s macroeconomic environment was ranked among the top 30 globally, with the country being the largest destination for FDI in the region.

The government recently introduced ownership laws to allow for 100% foreign investor ownership of companies outside free zones and 10 year residency visa options – a move designed to drive more foreign investment into the country and attract longer term residents.

More and more private equity firms in the region are growing their education portfolios in light of this climate, with the education sector ranking second in terms of private equity transactions among all sectors in the Middle East.

The cost of living in the UAE continues to increase however, and the degree to which this and the introduction of VAT will affect education sector growth is yet to be determined. The Dubai government has already stepped in by freezing tuition increases for the 2018/19 academic year to protect parents, but the move has caused some existing investors to reevaluate their investment decisions, at least for the coming year.

The country’s two biggest Emirates, Dubai and Abu Dhabi, have regulatory bodies in place to streamline the education investment and operations processes.

In Abu Dhabi, the Abu Dhabi Department of Education and Knowledge (ADEK) is undergoing changes to its mandate, shifting its focus away from public educational institutions – which are to move under the Ministry of Education’s responsibility – to focus on private institutions, in a manner similar to that of the Knowledge and Human Development Authority (KHDA) in Dubai.

Schools continue to face challenges in attracting and retaining the highest quality teachers and principals regionally and in the UAE market in particular. Recent legislation from the Ministry of Education to introduce teacher licensing aims to ensure a minimum standard of quality for all teachers in the country.

The UAE currently ranks 10th in HSBC’s 2017 Expat Explorer Survey, climbing two spots from its 2016 ranking, making it the highest ranking country in the Middle East in terms of expat attitudes and behaviours – an indicator for the attractiveness of a country to expats.

However, a recent survey by YouGov shows that 42% of surveyed UAE residents think the introduction of VAT is likely to discourage expats from coming to the UAE. This is mainly driven by the belief that the tax will increase the cost of living, and have a somewhat uncertain effect on the overall economy.

The UAE is at a point of inflection, making predictions for the coming years difficult to forecast. What is clear is that the country’s potential – and government willingness – to create a successful sector make for a strong starting point in the region. This is particularly relevant considering that the relative immaturity of the private sector in surrounding GCC countries, in particular in KSA, continues to drive expats to base their families in the UAE.

Sources: World Economic Forum, HSBC Expat Explorer, PwC Middle East Economy Watch, S& Investment opportunities in the GCC education sector, YouGov Omnibus Research 2018

Overall Quality of Education

The quality of the UAE’s primary and higher education systems rank among the top 20 globally

Global Competitiveness Index Rankings (2015, 2016, 2017)

  Change from 2016-17 to 2017-18 2017-18 2016-17 2015-16
Overall 17th 16th 17th
Quality of primary education 16th 12th 13th
Quality of higher education 12th 10th
Primary education enrolment, net % 87th 100th 94th
Secondary education enrolment, gross %   NA 71st 67th
Tertiary education enrolment, gross % 94th 96th 99th

The UAE continues to be the most competitive country in the Arab World according to the Global Competitiveness Index, but its ranking dropped back to 2015-16 levels in 2017-18. This was mainly due to the relative improvement of other countries, highlighting a need to accelerate change. Education was highlighted as a key driver of competitiveness.

UAE’s PISA rankings 2012-15 improved for Mathematics but dropped for Reading & Science, while TIMSS results showed better performance in Mathematics and Science for Dubai compared with Abu Dhabi 2011-15

PISA Results (2012, 2015)

PISA Results (2012, 2015)

Sources: OECD, Ministry of Education, International Monetary Fund

PISA Rankings: between 2012 and 2015 the UAE moved up one spot in Mathematics, where it now stands in 47th place, but fell two places in Reading, from 46 to 48 and in Science, from 44 to 46. However, the UAE Government has an aspiration to move into the top 20 by 2021.

PISA Scores: both UAE scores and OECD average scores dropped compared with 2012 levels. The UAE scores are the highest in the region, but remain below the OECD average. Dubai private schools offering international curricula performed better than private and public schools offering MoE curricula. The MoE curricula is being modernised to address this issue.

TIMSS Scores show significant improvement for Dubai in Mathematics and Science (4th & 8th Grade) and small improvement for Abu Dhabi in 4th Grade Mathematics & Science, with drops in 8th Grade Mathematics & Science performance.

TIMSS Results (2011, 2015)

Math 4th Grade
UAE 452
Dubai 468 Dubai 511
Abu Dhabi 417 Abu Dhabi 419
Math 8th Grade UAE 456 UAE 465
Dubai 478 Dubai
Abu Dhabi 449 Abu Dhabi 442
Science 4th Grade UAE 428 UAE 451
Dubai 461 Dubai
Abu Dhabi 411 Abu Dhabi 415
Science 8th Grade UAE
465 UAE 477
Dubai 485 Dubai
Abu Dhabi 461 Abu Dhabi 454

Key Education Trends: Pre-K

Pre-K enrolment is expected to increase in Dubai & Abu Dhabi, with the latter expected to grow at a faster rate

Pre-K Enrolment Estimates (2013-2021)

Pre-K Enrolment Estimates (2013-2021)

*: Estimated figure for Abu Dhabi and actual data for Dubai
**: Population estimates include half the 4 year old population to account for academic year considerations
Sources: UN, Dubai Statistics Center (DSC), Statistics Centre Abu Dhabi (SCAD), PwC Analysis

Whilst Dubai has reported having more than 200 nurseries, (around 50 more than Abu Dhabi reported), nursery enrolment in Abu Dhabi has seen faster growth, which, if it continues, will result in an expected 2016-2021 CAGR of 11.5% compared with 9% in Dubai. Overall we expect growth to continue as the emphasis on the importance of early childhood education increases, alongside a move towards higher female participation rates in the workforce.

OECD average participation rates of 0-2 year olds are estimated at 33%, compared to estimated participation rates of 7% in Abu Dhabi and 10% in Dubai.

Key Education Trends: K-12

More than 150,000 new students will enroll between 2016 and 2021 in private K-12 if enrolment growth continues at the current rate – although some of this will be absorbed by capacity in existing school with low utilization rates, particularly those most recently opened.

Private education enrolment is expected to grow at a CAGR of ~4%, almost 4 times higher than the rate of public education enrolment growth.

K-12 Enrolment Estimates (2013-2021)

K-12 Enrolment Estimates (2013-2021)

* Population estimates include half the 4 year old population and half the 18 year old population to account for academic year considerations.
Sources: UN, Ministry of Education, International Monetary Fund, PwC Analysis

There is a shortage of quality schools in the AED 30,000-50,000 fee range

Dubai’s average fees per student is around 26,000 AED, with the majority of schools charging fees below 30,000 AED, particularly where schools tend be bigger and have ratings of “Good” or lower. The majority of “Very Good” and “Outstanding” Schools charge average fees over 40,000 AED. There is a market gap for schools in the 30,000-50,000 AED range, specifically for high quality schools.

Private School Fee Distribution by Size, Curriculum and Rating in Dubai (2017)

Private School Fee Distribution by Size, Curriculum and Rating in Dubai (2017)

* Estimated figure for Abu Dhabi and actual data for Dubai
Sources: Knowledge and Human Development Authority (KHDA)

Key Education Trends: Higher Education

Higher education enrolment grew between 2013 and 2015 but fell in 2016, due to a drop in private enrolment estimated at -2.5%. If enrolment continues to drop at the same pace, the market will lose more than 10,000 students in private HE by 2021, in what could be called a pessimistic scenario.

On the other hand, the 18-24 population is projected to grow at a CAGR of around 2% (2017-2021), inbound student numbers exceeded 70,000 in 2016, and recent reforms have extended student visas from 1 year to 5 years and up to 10 years for “exceptional” students. These factors, in addition to arrival of highly ranked universities such as University of Birmingham, are likely to drive recovery in a “supply driven” market, closing some of the gaps resulting from the small range of programs currently offered. An optimistic scenario could see private enrolment continuing to grow linearly at a CAGR of 3.5%, adding more than 21,000 students by 2021.

The reality may be somewhere between these scenarios, where some recovery is expected, but at a growth rate lower than that seen over the past few years. We estimate both public and private enrolment will grow at a CAGR of around 0.7%, resulting in more than 5,500 extra enrolments by 2021.

Higher Education Enrolment Estimates (2013-2021)

Higher Education Enrolment Estimates (2013-2021)

*2014 is an estimate
Sources: Knowledge and Human Development Authority (KHDA), UN, UNESCO, Federal Competitiveness and Statistics Authority (FCSA), PwC Analysis

By Emirate: Dubai and Abu Dhabi dominate with the highest number of higher education students

In Dubai private provision makes up a much larger proportion of seats while in Abu Dhabi the split is even, likely driven both by the fact that ~70% of Abu Dhabi students are Emiratis, compared with ~35%,in Dubai. Equally important for understanding the difference is the impact of Dubai’s academic free zones, which attract a large number of private universities and international branch campuses to the Emirate, making private higher education a more attractive option for students seeking quality international education.

Higher Education Enrolment Estimates by Emirate and by Sector (2016)

Higher Education Enrolment Estimates by Emirate and by Sector (2016)

Sources: Knowledge and Human Development Authority (KHDA), Dubai Statistics Center (DSC), Federal Competitiveness and Statistics Authority (FCSA)

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