Education-The New Real Estate Opportunity

News Posted - 2010-03-04

The recent global economic crisis and real estate slowdown has necessitated change in business models, forcing investment firms to scout for new avenues. And the recession-proof education sector that has seen tremendous growth, has emerged as the new opportunity for the real estate sector.

Education infrastructure is an emerging asset class favoured by many investors and developers. In this decade, Education has seen tremendous growth and has been one of the few sectors not adversely affected by the downturn. This immunity to economic cycles has also made some view this sector as Recession-Proof.

In fact education sector is poised for robust growth as 30% of India's population is in the 0-15 year age group, creating a strong demand for educational facilities. Moreover India is being recognized as a favoured education destination across the world, with a large infl ux of international students.

Private investment

The momentum in the industry has been attracting investors, who expect lucrative returns on their investment and tend to prefer upcoming promising businesses. A recent survey showed that 80% of the 90 private equity firms were interested in investing in the Indian education sector.

This year, there has been substantial activity in this sector. Many investment firms have raised funds for deployment in education infrastructure. Milestone Group, predominantly a real estate fund, now intends to venture into the education sector and is planning to set up a US$ 128.7 million private equity fund, in partnership with Religare, with a specialized focus on education and healthcare. Kaizer Education is another fund planning to raise US$150- 200 million to invest in the Indian education sector. Low industry penetration, huge untapped potential, government support and attractive returns offer opportunities for companies to establish a presence in this space.