Demand for quality education is rocketing, especially in emerging economies. However, governments have struggled to match the demand. Especially in Southeast Asia, spending on private education has reached $60 billion according to World Bank. Some key actors include shrinking household size, rapid urbanization and the rising GDPs in this area.
In this article, we will identify some main drivers for investing in education in this region,
The demand for international schools throughout several countries in South East Asia has been gathering momentum over recent years and this looks set to gain further pace as a number of countries, including Myanmar and Vietnam, take big steps forward.
Several countries are welcoming investment and development. Even while the region continues to bear the brunt of the slump in the oil and gas market, which has seen the departure of many expatriate families, the vast majority of international schools throughout the region have reported growth of student enrolment this year.
Long Term Revenue Visibility
Parents rarely change their child’s school mid-stream. Schools, therefore, provide a predictable, long-term customer base with only one key transition between junior and senior school. This results in a reliable, multi-year revenue outlook with a single point of acquisition.
Positive Cashflow and Security
Schools generate positive cashflow because they collect fees in advance and are often profitable within three years of operation. Profit margins vary depending on the size of school but a good, 1800-pupil, K-12 school should generate profit margins of between 20 to 40%. The key costs involved are the rent for the campus and salaries/benefits for international teaching staff. Developers can expect competitive commercial yields and the attractive proposition of a single long-term tenant.