The already ambitious urban development agenda set out in Abu Dhabi’s Vision 2030 is taking on a fresh dimension as the emirate adjusts to the prospect of a major influx of public employees currently living in other emirates.

The Abu Dhabi Executive Council announced in September 2012 that all government staff currently resident in other parts of the UAE must move to Abu Dhabi itself within a year, or lose their housing allowances.

That mass move could have major consequences for education, further stimulating the already rapid growth in demand for school places. But government planners and private sector providers alike still find themselves wrestling with uncertainty. The scale of the task they must face remains hard to forecast.

Impact unclear

Six months after the ruling, and halfway to the deadline for implementation of this new rule, the true impact remains hard to gauge.

The number of government staff living in other emirates is estimated at anything between 5,000 and 10,000. But no one is yet sure how many of these have children of school age.

Indeed, it remains uncertain where the incomers will be housed and what the demand and provision for family accommodation will be. Abu Dhabi city itself is already densely populated, so many of the new residents may need to live in outlying communities such as Shahama and Bahia.

It is also unclear whether there is a good fit between the availability of accommodation and the planned or potential provision of new public and private schools. These issues are complicated by the variance in expectations according to where staff sit on the salary scale.

Estimates that 85-100 new private schools would be needed, at an investment cost of some AED3bn-4bn ($817m-1.1bn), have been reported.

The Executive Council’s decision was taken against the background of the sustained long-term population and urban development growth of Abu Dhabi. Already, education providers were planning for a continued rise in the demand for school places in both the public and private sectors.

US management consulting firm Booz & Co, which has researched the prospects for private education across the GCC economies, predicts that Abu Dhabi emirate’s population – about 2 million in 2011 – will grow by 65 per cent over 2011-20.

It expects demand for primary and secondary education in the emirate to increase by 5 per cent a year over the decade.

That outlook is shared by Natasha Ridge, executive director of the Sheikh Saud bin Saqr al-Qasimi Foundation for Policy Research in Ras al-Khaimah, UAE. “I expect that, with the economy looking more robust and expanding, more expatriates will be coming to the UAE and there will be further quite large increases in demand for private education,” she says.

Taking into account both the expected rise in enrolments and the likely evolution of tuition fees, Booz & Co anticipates that the private school market in Abu Dhabi – which was worth $500m in 2010 – will have grown to a value of $1.2bn-1.7bn a year by 2020.

Gems Education expansion

The size of the market should give education providers reason to invest in substantial extra capacity, and the evidence suggests that they will do so. Last October, UAE-based schools operator Gems Education set out an ambitious development agenda for the UAE.

“Gems Education has announced plans to open 10 new schools in the UAE over the next two years to meet growing demand and the quality targets set by the local authorities within the UAE,” says Dino Varkey, group chief operating officer and board member of Gems Education. “The schools will have British, Indian, International Baccalaureate, American and dual curriculums and will include a range of different fee levels. Gems Education is implementing a long-term growth strategy. This will involve the expansion of capacity across all our curriculums and price points.”

In this context of growth and investment, it may be possible that the influx of several thousand government-employed new residents into Abu Dhabi will simply be absorbed within the general upward trend – for which both public planners and private sector providers are already preparing.

But it is likely that new residence requirements will impose some additional pressure. More than two thirds of Abu Dhabi’s 183 private schools are already oversubscribed. In a recent UAE-wide survey of 850 parents by the online consumer price comparator Souqalmal.com, some 65 per cent of respondents complained about waiting lists for school places.

Although the rule will add to the pressures already felt in the education system, some experts believe its impact could be limited.

“I think this directive has already placed extra strain on the private sector and, as all employees relocate, demand will increase further,” says Ridge. “I am not sure, though, if this is any greater than the general growth in demand brought on by simple economic growth and expansion.”

Independent schools

The private sector’s role in catering for Abu Dhabi’s education demand has been growing steadily, from 36.6 per cent of school places in 2000-01 to 58.9 per cent by 2010-11.

This is not just because of demand from foreign nationals. The proportion of locals resident in Abu Dhabi who choose to send their children to private schools has almost doubled over the past decade, from just 16.8 per cent in 2000-01 to 31.9 per cent in 2010-11.

But the pattern varies by region. In the capital, the proportion of all pupils – taking nationals and foreigners together – educated in private schools was already 47.8 per cent back in 2000-01, and has since climbed to 66.1 per cent. In the Al-Ain region, the private sector has developed more slowly and has only just attained a market share above 50 per cent.

In the less densely populated and much less affluent Al-Gharbia (Western) region, the private sector has been slower to develop and still accounts for only 30.9 per cent of all pupils. An improvement in schools provision and standards in the west is set out as a key priority in the government’s Vision 2030 strategy.

The Executive Council’s decision to impose the new residence requirement on government employees is likely to reinforce the pattern of strong private schools growth in and around Abu Dhabi city because that is where so many non-Emirati public servants work. Meanwhile, the authorities will probably remain the key provider in the west.

Major private education providers seem confident about the potential for growth. Gems Education says there is already high demand for school places in Abu Dhabi and it also expects to see a natural growth in demand in other emirates.

“More and more people are moving to the UAE because of its excellent infrastructure and stable political environment, so growth in the education sector will continue,” a Gems Education spokeswoman tells MEED.

“The government should be commended for the emphasis it has placed on creating a knowledge economy, which includes the ongoing development of a quality education sector.”

In this broad growth context, it seems likely that schools in Dubai and Sharjah that lose children because families have to move to Abu Dhabi will soon be able to fill vacant places, either from existing waiting lists of expatriate and local children or from newly arriving residents.

Meanwhile, Abu Dhabi must ensure the right mix of extra schools capacity is developed in the right locations, within reasonable travelling distance of work and housing.

This is a complex challenge because of the varying educational curriculums and spending power to which the schools have to cater. Fees can range from AED2,500-90,000 a year.

At the middle and higher end of the range, the fees are sufficient to support major investments by large professional providers, who build modern and well-equipped schools and recruit well-qualified staff. They should support the extra investment needed in Abu Dhabi.

“I expect to see more investors in private education and more providers enter the market, and I think that existing providers will accelerate expansion in Abu Dhabi,” says Ridge. “Gems is also concurrently expanding in other emirates, so I do not think they will necessarily scale back other plans.”

Gems Education itself seems confident it will be able to sustain the necessary investments on a viable business basis.

“Gems is unique in that it offers a range of schools at different fee levels and different curriculums, so parents can choose the school that suits their socio-economic circumstances,” the company tells MEED. “This approach enhances the prospect of operating new schools, which are viable in the short and longer term.”

Smaller facilities

The impact of the new residence rule for government employees on small, lower-fee private school providers is less clear. One might expect the extra demand to stimulate expansion by these smaller and cheaper providers, spotting an opportunity to attract new customers.

However, ADEC will be keen to ensure pupils arriving in Abu Dhabi from other emirates are steered into mainstream private sector establishments and not into the smallest outfits.

ADEC has been engaged in a drive to phase out all villa schools (so-called because they are often based in converted private villas), refusing to accredit new ones and encouraging the existing outfits to merge to form larger institutions and move to normal school-style premises.

The question will be how fast the government and private companies can provide more availability.

Key fact

Abu Dhabi’s private school market is expected to be worth $1.2bn-1.7bn a year by 2020

Source: Booz & Co