Established schools under pressure, says Varkey

Established schools in Dubai may be in serious trouble because norms that restrict fee increases are making operations unviable, Sunny Varkey, Founder and Chairman of Gems Education told Emirates Business.

"We have invested anywhere between Dh50 million and Dh100m per school. Government rules allow a fee increase of 20 per cent every three years, which is just about six per cent per year.

"Over the past five years, while we may be allowed to increase fees by six per cent annually, operational costs have escalated many-fold. There is no parity between cost escalation and fee increases and this has to be corrected. It has to be at about eight or 10 per cent a year," he said, as he called for private schools to be allowed autonomous operations, without any government regulation or intervention on fees.

"Our schools that were providing surpluses are now in the negative. If, like the other countries, fees were increasing between eight and 10 per cent we would have had no problem. So we have no choice but to increase our fees," he said.

Varkey also confirmed that there would be no reduction or revaluation of the 90 per cent fee hike at Dubai Modern High School. The school, in a veiled attempt to circumnavigate the current restrictions, will move from its Jumeirah location to Nad Al Sheba this month and will levy fee increases of 45 per cent in its first year and 31 per cent in its second year – a 90 per cent increase from its existing fee structure.

Gems stated last month that the school would move to its new location following a notice to vacate its Jumeirah site. Regardless, the group acknowledged that Modern High would not be able to run without an increase of 25 per cent in the academic year starting next month and 16 per cent in the following academic year.

"The proposed increases for remaining at the existing campus are necessary because the rent at the existing campus could still be about three times greater than we were paying just two years ago, on top of other increasing costs," the group said in a circular issued last month. Gems Education had called on

the Knowledge and Human Development Authority (KHDA) for Modern High to be made a special case and have the raise approved.

However, the KHDA replied saying it would treat Dubai Modern High School at par with other schools if it remained at its Jumeirah site and the existing fee structure would remain.

As a result, the school would move to its Dh200 million Nad Al Sheba campus and subsequently hike its fees, Varkey said. "We cannot bring the fees down, they will go up. As prudent business people we will try helping parents, but beyond a point we will not be able to do much. It's up to the authorities to understand our predicament."

Varkey added that fees at Jumeirah College could rise by about 15 per cent in accordance with KHDA guidelines. The authority rated the college as "Outstanding" in its school inspection report, thus permitting it to apply for a maximum 15 per cent increase in fees.

"We will increase the fees as per KHDA norms," said Varkey. "If KHDA says 15 per cent, obviously we'll do 15 per cent."

Outside the UAE, the group would remain bullish in its expansion plans, adding 15 new schools in the next three months in India, Varkey said.

"We are in the business of education and healthcare, which are both recession proof. Our recent association with long-term investors like Abraaj Capital have kept us on course for expansion in both sectors," he said.

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