Investing in Kindergarten to Year 12 Schools in Saudi Arabia

Investing in Kindergarten to Year 12 (K – 12) Schools in Saudi Arabia will provide committed school operating and property investors, when properly led and managed, with significant financial returns in the medium to long term.

I have been involved in opening, leading and managing successful international private schools in Saudi Arabia since 1998.  I have found that the integration of academic and business excellence, with strong results-oriented leadership and management, is critical to the success of private schools in Saudi Arabia.  Academic and business excellence, with teaching and learning quality and student outcomes at the forefront of everything balanced with shareholder goals, are key.  It is also critical to be respectful of local values and cultures.

Saudi Arabia is the most attractive market for K – 12 private school investments in the GCC, with one of the largest education markets in the world.  Saudi Arabia will account for 62 percent of all education investments in the GCC in the next decade.  School age children in Saudi Arabia grew by 24 percent over the last decade to over 11 million.  Saudi Arabia will need over a million school places in K – 12 by 2020 to keep up with population growth.  Private schools in Saudi Arabia are growing at a Compound Annual Growth Rate of 4 percent.   There is a much stronger growth in private schooling places in Saudi Arabia compared to government places. These factors provide an enormous opportunity of investment into private schooling in the Kingdom.

For any potential investor looking at private schooling in Saudi Arabia my advice, based on experience since 1998, is there are several key actions that should be completed to achieve business and academic success.  These actions are:

  • Complete a professional new school feasibility study including market research, a marketing plan, business plan and implementation plan
  • Follow a professional program and project management approach during school opening
  • Implement experienced school governance, operation, leadership and management
  • Embed a strong school vision, including quality of teaching and learning objectives for parents and students
  • Ensure that you have sourced experienced teachers who support your vision
  • Establish and maintain strong and professional financial management

With these actions completed, my experience is that committed private school operating investors can expect to achieve financial returns, varying by school opportunity, of a:

  • Financial Breakeven within 3 to 5 years
  • Typical Payback Period of 4 to 6 years
  • Positive Net Present Value
  • Project Internal Rate of Return, to the end of the 10th year of operation of 20 to 30 percent

For those investing in purpose-built premises for new private schools in Saudi Arabia, my experience is that they can expect to achieve:

  • A long-term lease of 25 plus years
  • Predictability of income
  • Optimized operating expenses
  • Annual income of 7 to 9 percent
  • Long term capital gain of 3 to 4 percent per annum
  • Total return of 10 to 13 percent per annum

In addition, it is now speculated that the government of Saudi Arabia will allow foreign investment in schools, which has been prevented until now.  When this happens, it is important for foreign investors to collaborate with those people in the country that have experience in running schools in Saudi Arabia, and who understand how to meet the requirements of regulations.

So committed investors, looking for excellent returns in the medium to long term, should seriously consider investing in private school operating and property in Saudi Arabia.

Grant Jefferson
Chief Executive Officer
Intuitive Education Consultants

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Investing in schools in Saudi Arabia