Finding investment opportunities in the education sector

Character, creativity, conceptual thinking and compassion must be among the key area of focus for regional education providers if they are to be successful in the future, according to a global education expert.

Henk Van Hout, head of education services for Shell, was talking at the Investing in Education event, hosted by Gulf Business and Allied Investment Partners at Jumeirah Emirates Towers, where he highlighted some of the key things schools must keep in mind for the years ahead.

“The world is becoming more and more complex. We have very fast access to different types of knowledge, but in order to come up with new solutions to very challenging situations, you need to develop creative minds in your schools,” he said.

“The planet will need creative minds in the future. And there are other important things schools need to focus on. Character building, conceptual thinking. Compassion for the person next to you, for the community in the school, around the school, for the country you’re living in, compassion for the planet.

“Reflect that in your school, and it will be a unique selling point.”

 

Van Hout emphasised the importance of including STEAM (science, technology, engineering, arts, and maths) in schools, and striking a balance between knowledge skills and understanding.

“You can get your device out and in 30 seconds you have all the different kinds of information that you want. But what are you going to do with that information? That balance is very important.”

He explained to the investors in the audience that schools which focus on these elements will be attractive to the community they serve, and will therefore be set up well for the years ahead.

Also speaking at the event was financier, entrepreneur, and board member of wealth management firm Allied Investment Partners, Shailesh Dash.

He explained that education is a sector that “clearly stands out” as an important part of an investment portfolio, and is one that has brought consistently good returns, even during difficult economic backdrops.

“When you invest in education, you are going to get a very steady return. You can have a medium risk and high return, or low risk and very stable returns,” he said.

“One sector that helped us in the downturn of 2008-09, and in 2016-18, was education. Nobody would ever imagine that, but education was one segment that was giving us the highest return we received.”

The event also welcomed Raza Khan to the floor to present Aspire Education – a new education group due to launch in Dubai later this year.

The founding director has a strong track record in the sector as an owner, CEO and investor, having brought the Nord Anglia brand to the Middle East in 2006, running school groups in Europe, and serving as CEO of Al Najah Education.

Khan agreed with Dash’s emphasis on the quality of education as an investment asset.

“Education is one of the truly counter-cyclical and resilient business asset classes into which you can invest,” he said.

“Even as the market has gone up and down over the last decade, education – particularly international education – has seen consistent growth. And the best time to participate in a new education investment is at the early stage. If you invest in a school before it opens, before it has registered students and has started trading, that’s the way to generate the greatest returns.”

Aspire Education plans to launch two mid-market British curriculum schools in the south and east of Dubai – new residential corridors where population is growing fast, but where there is an undersupply of school seats.

“We have an opportunity to bring tier-one education to the mid-market and tap into the fastest growing community sector in Dubai, which is the middle class, middle income families,” he added.

Focusing on education real estate, the vice president of Atlas Real Estate Company Private Ltd, Harman Sandhu, explained that real estate has been a favoured asset class for GCC investors, largely due to its stability and its steady income stream.

“This income stream typically grows over time, so it acts as a natural hedge against inflation, which eventually gives real estate appreciation when you hold the asset over a long period of time,” he said.

Sandhu discussed Regulus’s new company, Atlas Real Estate, which, he revealed, “is going to be the GCC’s first education-focused real estate platform”.

Acquiring assets with a long term operation history, Atlas will sign long lease agreements with operators – at least 20 years – in order to provide stability to investors, and a predictable income stream.

“Atlas, based on the existing contracts that we are looking to sign, will be providing 7-8 per cent quarterly dividends,” he said, “compared to 5-6 per cent in Malaysia and Singapore.”

As Van Hout highlighted in his presentation, “there are some very interesting opportunities” in the region at present. And with the help of Allied Investment Partners, the audience at Investing in Education have a head-start on discovering where these opportunities are.