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International schools are drawing cross-border property buyers
By Juwai, 25 September 2020
As more people grow wealthier in new and emerging economies across the globe - from a first-time home buyer to a property investor purchasing cross border for children studying overseas - real estate has never been more important to a wide segment of ordinary global citizens.
And for those with children who are relocating due to their jobs or emigrating to another country to start a new life, destinations with high-quality educational facilities have become a priority. International schools are broadening their appeal and helping to break down barriers between nations especially for globetrotting expatriates and emigrants who wanted continuity of education for their children. As such new townships, especially in Asia, that are being developed today often include an international school in their overall master plan. Developers when promoting and marketing their new developments normally tend to list nearby amenities in the area. It is common for them to mention attributes such as “only five minutes’ walk to the nearest train station” or “15 minutes’ drive to the central business district” or “walking distance to the nearest supermarket or upscale mall”. However, of late, proximity to international schools has become a priority on the list as well.
Why do realtors highlight educational facilities?
There have been many studies that show a high correlation between elite schools and home values and families tend to search for homes based on the quality of schools in the neighbourhood more than ever before. According to the National Bureau of Economic Research in the US, in any given neighbourhood for every dollar spent on improving public schools in a community, home values increased USD20.1 For domestic buyers, living near a popular school also means your children are more likely to get in. As such, there’s always good demand for homes near “elite” schools. This also benefits landlords who own properties in the area. The reason being if the family’s children attend the nearby school and they are renting, they’re likely to stay longer and as such will sign longer leases.
College towns are attractive
The most attractive cities for buying a property for education by foreigners are those which are home to top-ranking universities or top-notch international schools. These cities tend to be more rentable when not in use by owners. In these circumstances, the rental yield may be a major consideration before an investment is made.
Another category of ‘educational purchase’ is apartments and houses purchased by high-net-worth property investors which will be used by family members on visits and vacations as well as for their children who are studying in the area. This is especially the case for foreign students a long way from home. These purchases will likely be of a type, size and quality not often associated with lone student living and in locations not traditionally associated with low-cost student accommodation and more likely in upscale neighbourhoods such as Kensington in London, Manhattan in New York or Central in Hong Kong.2
International schools on the rise in Southeast Asia
International schools have enjoyed phenomenal growth in recent years, with no sign that the trend is likely to slow. According to international schools data experts ISC Research, the international education market is valued at USD46.7 billion and is expected to grow to USD66.6 billion by 2023. The last five years since 2019 have seen the number of students enrolled in English-medium international schools grow by almost seven per cent a year, with such schools now accounting for 5.1 million children across the world. And this growth is forecast to continue, with almost seven million children expected to be attending international schools in 2023.3
Malaysia in particular has been leading the region in Southeast Asia with the highest number of students with 71,589 students enrolled in premium English-medium international schools, according to data released by ISC Research. The country has the third highest number of schools in SEA with a total of 170 international schools, just behind Indonesia (190 schools) and Thailand (181 schools).4
Does proximity to international schools boost property prices?
In Southeast Asia, the answer varies. Agents argue that the price of a property near the vicinity of an international school depends on many factors. However most agree that generally the presence of an international school will carve a more positive and prestigious image for an area and hence help to generate better rental yields for property owners there. They say investors who are not occupying properties for own use are keen to invest in these areas due to the higher rental demand and better rental yields. However, no study has been carried out and it is not possible to quantify the impact international schools have on property values in an area.
Sources: 1. Public School Review: What is the Connection Between Home Values and School Performance?; 2. HSBC: Global Real Estate Trends in the world’s largest asset class; 3.Forbes: International Schools Are Broadening Their Appeal And Breaking Down Barrier; 4.ISC Research: Global Opportunities Report 2019