Dubai’s growing expat population fuels billionaire-backed private school boom

As Dubai continues to attract wealthy expatriates, GEMS Education stands poised to benefit, making the most of a city that has become a global hub for the affluent

PRAVASISAMWAD.COM

Expats in Dubai are driving the expansion of one of the world’s largest private school operators, GEMS Education, founded by Indian-born billionaire Sunny Varkey. At GEMS World Academy, one of its premier institutions, fees for students can reach as high as $33,000 by grade 12, reported economictimes.indiatimes.com.

Even kindergarteners enjoy access to cutting-edge learning tools, such as iPads, and the school boasts facilities like a 70-seat planetarium. These steep costs are a reflection of the booming demand for high-quality education in Dubai, particularly from expatriates who make up around 90% of the city’s population.

GEMS caters to a wide range of income levels, with annual fees starting as low as $3,900. However, a surge in the number of high-net-worth individuals, particularly bankers and hedge fund traders drawn to Dubai’s financial sector, has seen premium schools like GEMS World Academy flourish. Dubai’s private school sector is especially lucrative, as the city’s public schools are largely inaccessible to expatriates, pushing foreign families towards private options.

Dubai is not alone in having pricey private education systems. In the UK, for example, Nord Anglia Education Ltd. is valued at $15 billion. However, what sets Dubai apart is the absence of affordable public schools for expats, creating a lucrative opportunity for private school operators. The Dubai government estimates that the city’s population will surge to 5.8 million by 2040, further boosting demand for education. GEMS Education plans to add 30,000 new school places to keep up with the influx, according to Chief Executive Officer Dino Varkey.

The Varkey family’s fortune has swelled to $3.7 billion, as ranked by the Bloomberg Billionaire’s Index. Dino Varkey acknowledges that the family’s success would likely not have reached such heights in more established markets like the UK or US. While GEMS is now looking to expand into Saudi Arabia, Dubai remains its primary focus, despite the city’s economic cycles that could impact expat numbers. For now, demand continues to rise, and GEMS is confident that Dubai parents will keep paying top dollar for premium education.

This trend isn’t limited to the wealthiest of Dubai’s residents. Mid-level professionals, teachers, and small business owners also feel the pressure to afford quality education for their children. A report from Alpen Capital found that 80% of families in the UAE allocate more than a third of their income towards school fees. Many parents, faced with high tuition costs, are depleting their savings or taking out personal loans to cover expenses. A 2017 study by HSBC Holdings Plc revealed that families in the UAE spend more on education than any other country, with the exception of Hong Kong.

• The company’s rise contrasts sharply with the challenges it faced during the pandemic when schools across the UAE and the world temporarily closed

• However, in August 2023, Sunny Varkey secured a new partner in Brookfield Asset Management, which committed $2 billion to the company

• The deal, which followed a meeting in London’s Dorchester Hotel, signified a renewed belief in the strength of Dubai’s private school sector

While the quality of education in Dubai has improved over the years, concerns remain about its relatively new system compared to older, more established institutions worldwide. Dino Varkey, however, highlights the fact that GEMS students are accepted into prestigious universities like MIT, Oxford, and Cambridge. He also notes that GEMS schools offer a range of curricula, from American and British to Indian and International Baccalaureate, catering to Dubai’s diverse expat community.

To meet demand, many GEMS schools are nearly at full capacity, and parents are often placed on waiting lists. Some even find themselves paying more than planned due to limited alternatives. The younger Varkey has called for deregulation of school fees in the UAE, arguing that more flexibility would attract foreign investors and allow for more competitive pricing.

The origins of GEMS Education trace back to Sunny Varkey’s early years in Dubai when he and his parents established English-language classes. Over the past decades, GEMS has grown from a single school with 300 students to a network of 44 educational institutions in the UAE, with further expansions into Qatar and the UK. Today, GEMS Education generates over $1.2 billion in annual revenue, with about $400 million in earnings before interest, taxes, depreciation, and amortization (Ebitda).

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