DUBAI Education Supply

Dubai Private Schools

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No. of Schools by classification

No. of Schools by submarket

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DUBAI Education Demand

Dubai Enrolments by academic year

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Demand per curriculum

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DUBAI Education Performance

Dubai private school KPI 2025

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Real Estate X – Discovery Data

Three prominent education transactions occurred amongst other smaller asset transactions, fuelled by strong demand and established brands situated within established communities. Prime yields falling for the second consecutive year.

Private School Gross Revenue Estimate (AED Bn)

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Performance vs. Cost of Entry (premium)

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DUBAI Education Valuation

Key Valuation Considerations

VALUERS ARE PROVIDING A MARKET VALUE OF THE PROPERTY NOT THE BUSINESS

Valuers should use multiple methods and scenarios in order to establish an opinion of Market Value. Expect to see both an income capitalisation approach using known equivalent yields within the Market and comparable lease transactions and, in accordance with VPGA 4, expect to see a profits approach being utilised in order to analyse the property as an operational entity. Lastly, your valuer should consider a vacant possession, assumption or cost of entry into the market when providing an opinion of value.

Under VPGA 4, a valuation would include:

• the legal interest in the land and buildings as a whole
• the trade inventory, usually comprising all trade fixtures, fittings, furnishings and equipment and
• the market’s perception of the trading potential, together with an assumed ability to obtain/renew existing licences, consents, certificates and permits.

But exclude:

• Any personal goodwill - this is the value of profit generated over and above market expectations that would be extinguished upon sale of the trade related property, together with financial factors related specifically to the current operator of the business.

The valuation should establish the most likely scenario upon a hypothetical transfer to replicate how the market would perceive the asset at the date of valuation and therefore the forecasts are prepared upon that basis. Where assets are managed and have brand agreements associated with them, to ensure continued operation, these associated costs are continued on within the forecasts. If alternatively, upon a transfer it is likely that the asset is transferred with vacant possession, the forecast must reflect and accommodate this scenario. It is important not to value the current managements income and expenditure as this may not be commensurate of a ‘market participant’.

The assets’ trading forecast should prepared until stabilisation only, it is unnecessary to forecast forward any further than necessary, often leading to subjective income and expenditure assumptions. The EBITDA derived at stabilisation is used as a basis for future income flows and inflated at an appropriate rate for the duration of the period analysed.

The terminal yield is selected by analysing the most recent transactional evidence and subsequent adjustments made to reflect the Property. The market levels of multiple expected in the current market are considered however, consideration is also given to the expected market conditions at the end of the explicit forecast period and characteristics of the Property upon capitalisation.

The rate at which the forecast cash flow is discounted should reflect not only the time value of money, but also the risks associated with the type of cash flow and the future operations of the asset. As the valuation is prepared on an operational basis, operational income and expenditure is included within the forecasts.

Specifically, Real Estate X will assess whether the risk of the underlying forecast cash flow assumptions is captured in the applied discount rate. The discount rate selected should also have weighting to value indications from other approaches, such as market approaches, or implied multiples required from the income approach (income capitalisation).

From an operational perspective, any forecasts that stabilise above 80% occupancy will be subject to additional risk premium, as achieving sustained 80% plus enrolments requires strong demand in all sections throughout the duration of the cashflow, in addition, the capacity of the facility also contributes to the risk. In the current market where, strong growth has been evidenced across the education sector, the elevated enrolment numbers should be viewed with caution as this in turn attracts new investment and new supply. In these examples care must be taken to incorporate a risk premium over and above the inflationary assumptions or forecasts should explicitly allowing for a long-term level of stabilised income.

The education market is small in comparison to other sectors, small shifts in dynamics can have big impacts on bottom-line performance, In the current market, as the majority of established schools have hit the point where additional pupils do not incur any additional variable cost, we have seen EBIDTA levels in some cases double within a period of 3 years. This consideration must be given when providing an opinion of value.

Disclaimer

Real Estate X gathers its data from sources it considers reliable; however, it does not guarantee the accuracy or completeness of the information provided. Any forward-looking information and statements contained herein are subject to various risks and uncertainties, many of which are difficult to predict and could cause actual performance to differ, other firms may also have differing opinions, projections or analysis. The information and analysis herein do not constitute advice of any kind and should not be used for investment purposes, Real Estate X, nor any of its subsidiaries or their respective officers, directors, shareholders, employees or agents accept any responsibility or liability with respect to the use of or reliance on any information or analysis contained in this document.

This work is copyright Real Estate X and may not be published, transmitted, broadcast, copied, reproduced or reprinted in whole or in part without the explicit written permission of Real Estate X and Real Estate X has no obligation to update or alter its opinions should market dynamics later change.

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