Investments in Emerging Markets is a current hot topic!

Have you ever considered why investments in emerging markets are accelerated by international schools?

Are you aware of the impact international schools make on realestate investments within the catchment area?

Why do developers contact GSE so desperate to have someone set up an international school in their development?

Investments in Emerging Markets

Master Planning Investments in Emerging Markets with Education

The correlation between the proximity of residential properties to schools and their valuation holds profound implications, particularly in developing countries where new international schools are being established as part of meticulously planned communities. Numerous studies underscore the significance of this relationship, revealing that housing prices tend to appreciate alongside the quality of nearby educational institutions. In burgeoning markets, the establishment of high-quality international schools not only enhances educational opportunities but also drives the desirability and value of surrounding properties. Investments in emerging markets are accelerated when partnered with schools.

“Well operated ad successful schools make money for school investors however developers will make much more through the increased valuation of real estate in their planned communities.”

Greg Parry GSE Co-Founder and CEO

In the context of developing countries, where new international schools are emerging as integral components of planned communities, the relationship between school proximity and property values takes on heightened importance. Research consistently demonstrates that homes situated in close proximity to esteemed international schools exhibit greater value compared to those located farther away. This trend is attributable to the burgeoning demand for quality education among both local and expatriate families, who prioritise access to reputable educational institutions for their children.

In the context of developing countries, the establishment of new international schools often signals broader socioeconomic development and investment opportunities within the region. Developers spearheading the creation of well-planned communities recognise the pivotal role of high-quality education in fostering sustainable growth and attracting discerning residents. As such, the integration of international schools within these developments serves to enhance their appeal and contribute to the overall liveability and prosperity of the community.

Resilience Amid Economic Uncertainty and Investments in Emerging Markets

An additional dimension to consider is the resilience exhibited by properties within the vicinity of international schools during periods of economic uncertainty. In developing countries, where economic volatility may be more pronounced, homes located near reputable educational institutions are perceived as stable investments. Even amidst economic downturns, the demand for quality education remains steadfast, thereby insulating properties within close proximity to international schools from the fluctuations that often afflict the broader real estate market.

Investments in Emerging Markets

Case Studies in Developing Countries and Investments in Emerging Markets

To illustrate the impact of school proximity on property values in developing countries, let us consider a case study conducted in a rapidly growing city in Southeast Asia. This study examined the influence of proximity to a newly established international school on housing prices within a newly developed residential enclave. The findings revealed a significant positive correlation between proximity to the international school and property values, with homes situated in closer proximity commanding premium prices. This underscores the pivotal role of international schools in driving the value proposition of emerging residential developments in developing countries.

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A separate case study conducted in a burgeoning urban center in Africa provides additional insights into the correlation between school proximity and property values. In this context, the establishment of a new international school within a planned community catalysed demand for residential properties within its vicinity, leading to notable appreciation in housing prices as well as an increased demand. The development expanded faster and further than they expected and in addition to the K-12 school, two kindergartens were developed. This case study highlights the transformative impact of international schools on the development trajectory of emerging urban centres in developing countries.

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It is not uncommon for developers to invest in the “PropCo” (land and facility), knowing that although the investment is significant they will reap significant rewards later. The developer has options to sell the property to a Real Estate Investment Trust (REIT) at very high valuation after 3-5 years and the very secure yield can be 7-9% of valuation, or even higher depending on the location. The developer is able to promote that their community has an excellent school and demand and valuations sky rocket. In fact we have created and negotiated strategies like this between investors of PropCo and Operating Company (OpCo) partners in our financial modelling processes.

South Korea Trends

International schools have become significant drivers of South Korea’s real estate market in recent years. Areas housing these schools have shown resilience to price drops, with some experiencing increases even during real estate downturns. Notably, in Seogwipo, Jeju, the presence of four international schools near the English Education City has led to a 4% rise in apartment prices, contrary to the national average decline of 3.5%.

Competition for admission to these schools has intensified, driving up nearby apartment prices and transaction volumes. This trend is not unique to Seogwipo; similar patterns are observed in regions like Yeonsu-gu, Incheon, where an International School has spurred a seven-fold increase in apartment sales.

These successes highlight the positive impact of international schools on local real estate markets. With plans to establish more international schools across South Korea, the intertwining of education and real estate dynamics is expected to continue.

(Source: Adapted from International Schools: A New Factor in Real Estate Market Trends )

Learn more about international school business models: Three Essential Partners for Quality Schools

Investments in Emerging Markets
Investment Valuations are Impacted by Good Quality International Schools

Factors Influencing the Impact of International Schools on Property Values

Several factors influence the impact of international schools on property values in developing countries. Foremost among these is the quality of education offered by the institution, which serves as a key determinant of its attractiveness to prospective residents. Additionally, the availability of modern facilities and amenities within the school campus further enhances its appeal and contributes to the overall desirability of surrounding properties.

The reputation and accreditation status of the international school play a pivotal role in shaping perceptions of the surrounding community. Developers keen on fostering well-planned communities prioritize partnerships with reputable educational institutions to ensure the long-term viability and success of their projects. As such, the establishment of internationally recognised schools within emerging residential developments serves as a catalyst for sustainable growth and prosperity. Investments in emerging markets partner well with education.

Insights into Homebuyer Preferences in Emerging Markets

In developing countries, the quality of international schools holds significant sway over homebuyer preferences, particularly among expatriate families and upwardly mobile local residents. Recent studies indicate that a considerable proportion of homebuyers prioritise access to quality education when selecting residential properties, with proximity to international schools emerging as a key deciding factor.

Additionally, the integration of international schools within planned communities offers numerous benefits beyond educational opportunities. These include enhanced community amenities, improved infrastructure, and access to a diverse range of cultural and recreational activities. Consequently, properties located within close proximity to international schools command premium prices, reflecting the added value perceived by discerning homebuyers seeking holistic living experiences in developing countries.

If you want to learn more about the steps required to set up a school check out some of our other articles:

Steps to Setting Up a New School

10 Steps and Articles on How to Set Up a New School

GSE International School Franchise Models

GSE provide specialist services to set up all forms of education institutions including international schools, kindergartens, vocational colleges, universities and online/virtual schools.

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CEO and Education Expert Greg Parry

Greg Parry

Internationally renowned for his expertise in education leadership, Greg Parry’s vast experience includes leadership of projects for education institutions throughout Australia, the Middle East, the United States, India, Indonesia, Malaysia and China. Recognised for his numerous contributions in the education arena, Greg has received the Ministers Award for Excellence in School Leadership based on improvements in school performance and a range of successful principal training and leadership development programs, as well as the School of Excellence Award for Industry/School Partnerships and the School of Excellence Award for Technology Innovation. His company GSE (Global Services in Education) has been recognised as having the Best Global Brand in International Education in 2015 and 2016.

Considered one of the premier experts in his profession, Greg has trained teachers and principals throughout the world in areas such as critical thinking, language development and leadership. His expertise in school start up projects, leadership and curriculum development, has made him a sought after authority in these discipline.

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