Vietnamese giants invest heavily in educational real estate

From a business perspective, education is also considered a market, even evaluated as very potential when it attracts the attention of many domestic and foreign investors. In fact, more and more corporations are investing in building large-scale universities, and the management and operation of educational real estate are also paid more attention.


Large playground for investors


Recently, Savills Vietnam became a facility management unit of Phenikaa University based in Yen Nghia Ward, Ha Dong. Under the agreement, Savills Vietnam will provide facilities and facilities management services including lecture halls, dormitories, football fields, multi-purpose stadiums, student halls/lecture halls. This is one of the first educational real estate projects in the management portfolio of Savills Vietnam.


About real estate experts, this is also the first educational real estate project to have a professional company managing and operating in Vietnam to this point.


Although before that, the market also recorded some M&A transactions taking place in this area. Specifically, the Cognita Education Fund purchased Ho Chi Minh City International School and Saigon Pearl Primary School. The North Anglia Foundation bought the British International School. TPG Investment Fund of America merged Vietnam - Australia School. EQT Fund invests in ILA - a large chain of English centers in Vietnam.


Having a large capital investment in international schools shows the development potential of international education in Vietnam is huge.


Vietnamese will soon be able to pay more for their children's education according to a higher standard of education.


Mr. Troy Griffiths, Deputy CEO of Savills Vietnam, said: “With 41% of the population of the “golden generation” (under 24 years old), the number of rich people and middle-class families is increasing. Vietnamese will soon be able to pay more for their children's education according to a higher standard of education. The demand for higher education in Vietnam is expected to remain high.”


According to Mr. Griffiths, in fact, many Vietnamese "giants" are well known in the real estate market and have been investing heavily in the field of education with separate visions and missions such as Vingroup and Viet Hung (Vihajico), Sunshine Group and FLC...


Specifically, in March, Vingroup Group officially announced its participation in Higher Education with the VinUni University brand (VinUni). According to the group's statement, VinUni University will develop education and training majors in three key areas: business, technology and health sciences.


Earlier, at the end of 2017, Sunshine Group also officially signed a strategic cooperation with global education organization Maple Bear (headquartered in Canada) in building and developing international standard 5 stars Sunshine Maple Bear.


Most recently, FLC Group has also started to build a 50ha FLC University in Quang Ninh with a multi-disciplinary orientation, focusing on three key areas: tourism, aviation and technology. high in the early stages. It is expected that the school will scale 600 students in the first enrollment season by the end of 2020, and increase to 6,100 students in 2024 and 20,000 students in 2035.


Mr. Griffiths said that, with policy reforms such as Decree 86 and Decree 135 of the Government, Vietnam's education sector is open to foreign investors. Particularly in the first six months of 2019, FDI in the field of education reached US $ 64 million, doubling the first half of 2018.


Professionalize the management


Given the interest of "big" companies in real estate, coupled with the development of current educational institutions when there are schools ranging from several hectares to several tens of hectares, the issue is needed. Must professionalize the management and operation.


The potential of educational real estate poses an urgent need to professionalize management and operation.


Vu Kieu Hanh, a real estate researcher, said that previously facilities management at public, international and private educational institutions... were all self-employed by universities. But self-management facilities will quickly degrade, facilities system is more risky.


Because, management of educational real estate is not different from real estate of houses, commercial, offices... all need the safety of fire protection, quality assurance of buildings. In particular, educational real estate has more specific features, such as the management of canteens, laboratories, lecture halls, dormitories, power systems... to maintain stability for teaching in schools.


Assessing this issue, Mr. Matthew Powell, Director of Savills Hanoi, said that compared to office projects, commercial, educational real estate management is more complicated.


Mr. Powell said that Savills will learn from the experience of international markets such as the US and UK to bring applications suitable to the Vietnamese market with the expectation that it can improve the quality of education.


Regarding funding, Mr. Powell said, the management of residential real estate, offices, commercial centers... usually has a 2% maintenance fund contributed by the people, or businesses deduct the rental business trade for operating costs. Meanwhile, the operating cost of educational real estate is entirely paid by the school and students are paying a small fee at the dormitory.


According to Ms. Vu Kieu Hanh, in order to attract students, the management of educational real estate will make an important contribution to help parents decide to prioritize schools with better facilities for their children to study.


"This will be an explosive trend when many universities of domestic and foreign corporations will be inaugurated in Vietnam in the near future", Hanh said.


However, Savills representative said that the strict regulations in Vietnam could also be a challenge for foreign investors in this field. High tax rates, the minimum investment capital for each type of institution and educational cooperation, the need for manpower and the complex licensing process are initial barriers for any investor who wants to put capital into any educational estate.


According to Tam An