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Real Estate Developers getting into Education Business

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CaptureRupees 3.83 trillion – that is the market size of the education industry in the country just for FYI4. Not surprising that more and more developers are integrating the education vertical into their realty plans. What is also adding to the soaring hopes are prime examples of many corporate players entering the education business and going great guns at that.

Pegged a ‘sunrise sector for investment by a Deloitte study, education offers unparalleled potential for investment both in the regulated as well as non-regulated markets. Even as the realty sector is getting emboldened by a positive sentiment after a long hard time down in the dumps, increasing number of real estate developers are making a foray into the education sector.

What began as an almost casual practice of setting up a school within an integrated township has over a period taken the shape of a strategic business development decision for many. Although not more than a trickle as of now, the education sorties of these fresh players are sure to spark a trend in the not-too-distant future. Looking at the 360 degree dividend that the education ‘business’ can bestow coupled with the opportunities it offers within their core areas of specialisation, more and more developers across the country have started focusing big time on an education vertical.

And strengthening their resolve to explore an altogether diverse territory is the shining example of those from across industries who ventured into education in the last decade and are established players by now. Leading lights are Reliance Industries, Vedanta, Jindals, Munjals, Mahindras, HCL and Yamaha Motor among others.

CaptureA report by rating agency CARE pegged the market size of the education industry in the country at around T3.83 trillion (562.34 billion) in FY14. Higher education contributes 59.7 per cent of this, school education 38.1 per cent, pre-school 1.6 per cent, and technology and multi-media the remaining 0.6 per cent.

On top of it all, the education sector is poised at a crucial stage of growth. The country’s demographic advantage of having a large population of youth, coupled with low gross enrolment ratios (GER), presents a huge opportunity to private players to turn towards the sector.

The growth of the economy and northward movement of income levels is egging people to spend more on education providing another big incentive to private investors. Coupled with these, the other logical factors attracting most of the players, including those from the real estate industry, are steady cash flows, recession-proof nature of the sector and negative working capital requirements.

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Some of the initiatives taken by the Centre and state governments have also facilitated the private sector forays into education. The Centre has allocated ?500 crore in the Union Budget 2014-15 to set up five more !ifs and five new Ms. A national multi-skill programme called ‘Skill India’ is proposed to be launched as announced by the Finance Minister in his Budget speech. Various states have also changed their laws to attract private funds into education. For instance, the Uttar Pradesh Government established the Amity, Sharda and the Galgotias universities by amending state laws.

Lack of physical infrastructure in the education sector, which has become a key focus area for the Government, also provides huge opportunities for real estate players. According to a survey by DTZ India, nearly 5,550 million square feet of real estate demand would arise from the higher education sector to achieve a GER of 30 per cent by 2020. This includes development of educational institutes and support services like hostels, retail space, etc. Additional revenues can be generated by providing amenities like staff-housing, recreation facilities and play areas apart from retail and entertainment space.

Among the realty players’ education forays, the Jaypee Group of companies can easily be dubbed as the trailblazer. Its education initiatives started in 1984. Today the group provides education across the entire spectrum of the learning curve through four universities, seven private ITIs, two polytechnics, a post-graduate college, a B.Ed college, a construction skills training institute and 32 schools catering to the learning of over 30,000 students.

Jaypee Group’s founder chairman Jaiprakash Gaur’s belief that “one educated man can transform the life of 10 people” was behind its foray into the education sector. The Group believes that “education ignites motivation to do better and move up the social strata triggering all-round growth in all spheres of society.”

gaursons internationalThe educational Institutes of Jaypee are spread across several states and its schools are near its cement and power project sites which cater to the underprivileged sections of the society.

The education initiatives of the Group are undertaken through Jaiptakash Sewa Sansthan, a ‘ not-for-profrt trust’.

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The Group claims that the infrastructure facilities so far created by it are world-class and the environment is very congenial for education. It also boasts of a high-standard faculty. “Linkages with international institutions of repute have been developed to meet international benchmarks for under-graduate and post-graduate programmes, evaluate and fine-tune skills and knowledge of faculty,” according to Vidya Basarkod, spokesperson of the Group.

The Group also has plans to start 50 world-class institutes which will impact at least one lakh students. Regarding the Government initiatives in the education sector, the spokesperson said: “While quantitatively India is inching closer to universal education, the quality of its educational institutions has been lacking particularly in Government-run schools.” The government, Basarkod said, needs to take concrete steps to improve the qu ahty of education in the country.

The Wave Group is another prominent realty player which is also a well-known name in the education sector. Actually, the Wave education foray preceded its entry into the real estate sector. Besides operating a residential school in Noida by the name of Genesis Global School, the Group through its non-profit NGO has been running a charitable special school for mentally and physically challenged children. Mata Bhagwanti Chadha Niketan (MBCN) run by the Mata Bhagwanti Chadha Charitable Trust is one of the very few private rehabilitation institutions, that doesn’t charge any money for the services provided to thestudents.

MBCN is part of the corporate social responsibility by a flourishing group of commercial companies. Late Gurdeep Singh Chadha (popularly known as Ponty Chadha), farmer MD of the Wave Group, established Mata Bhagwanti Chadha Niketan in July 1999. Initially set up in a rented building in Noida, MBCN later shifted to a modern two-acre campus on the Noida-Greater Noida Expressway.

The Wave Group’s Genesis Global School is a residential school with a campus spread over 30 acre. The day-cum-boarding school emphasises the importance of technology, modern pedagogy, culture and innovation in its syllabus. Last year, the school was ranked fifth in a survey of schools across the country by leading daily The Hindustan Times.

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The school offers Wi-Fi on-campus, e-classrooms, multimedia library and computer labs. The Genesis building is centrally air-conditioned and also provides hostel facilities. In addition to academics, there is a strong emphasis on sports at the Genesis Global School.

As recently as September last year, another prominent real estate player, Gaursons, stepped into the education sector by laying the foundation stone of Gaur’s International School at Gaur City 2 in Greater Noida West.

The company claims that the school would be one of the best in terms of Infrastructure and facilities, it will be spread in five acres of land. It will also have facilities like an international-level boxing ring, wooden basketball court and a shooting range. Students will also have access to 18-acre Gaur City sports complex for inter and intra -school competitions, day-and-night cricket stadium, football field, swimming pool and athletic tracks. The management has also promised to rope in the best teachers across the city to make Gaur’s International School one of the best educational institutions in the region.

CaptureAt the time of the announcement, Manoj Gaur, Managing Director of Gaursons India Ltd, said: “Our objective of foraying in the education sector is to provide world-class education in the region and prepare leaders for the future.” But for Gaursons, the entry into education is not just a diversification or expansion strategy as it plans to set up a school in every existing and upcoming township of the company so that the residents don’t face any problem related to education.

NCR-based MMR Group is another prominent real estate player which made a humble, yet impressive, foray into the education sector way back in 2009. And the venue it chose for the launch was Bulandshahr in Uttar Pradesh, the native place of its CMD Mahipal Singh Raghay. The senior Raghav wanted to do something for the masses and uplift of society and what better option he could pick than education.

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CaptureMMR started its first school at Mandawali in Bulandshahr with more than 500 students and classes from Nursery to Cass 5. By next year, it plans to upgrade the school till Class 10 and later till Class 12. The fee has been pitched at a nominal ‘800 per month, and that includes transportation as well. Around 20 per cent of the students are offered 100 per cent scholarship on their tuition fees.

Motivated by the success of Bulandshahr experiment, the MMR Group started its second school with the state-of-the-art infrastructure at Sector 122 in Noida in 2012. The Noida school has classes till Class IV only as of now with a total enrolment of more than 300 students. But the Group has grand plans for the future believes in going forward in the education line steadily, though surely.

“We intend to open around 10 new schools in next five years with one in Noida Extension and another at Bulandshahr in the near future,” said Rahul Singh Raghav, Director of MMR. ‘Also, we intend to start employability enhancement and vocational training courses in the campus for increasing the rate of employment in these areas”, he added.

The latest to join the education bandwagon is the Paras Group, a well-known name in dairy products, real estate and healthcare sectors. The Group is set to open the first campus of The Paras World School India’ (TPWSI), at Sector 50 in Gurgaon sub-city.

According to a Paras spokesperson, all these schools will impart education under a highly specialised curriculum. With a strong focus on updating of the curriculum, the teachers will receive backend research support from the R&D staff. To make it truly international, the curriculum philosophy of the first school in Gurgaon will be based on Harvard’s Project ‘Making Learning Visible’ conducted by Mara Krechevsky and Howard Gardner at the Harvard Graduate School of Learning.

vidya“While quantitatively India is inching closer to universal education, the quality of its educational institutions has been lacking particularly in government-run schools”
VIDYA BASARKOD, President (Sales & Marketing), jaypee Group

What began as an almost casual practice of setting up a school within an integrated township has over a period taken the shape of a strategic business development decision for many. Although not more than a trickle as of now, the education sorties of these fresh players are sure to spark a trend in the not-too-distant future.
Those from across industries who ventured into education in the last decade are established players by now. Leading lights are Reliance Industries, Vedanta, Jindals, Munjals, Mahindras, HCL and Yamaha Motor among others.

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Mr.Manoj-Gaur,MD,-Gaursons-India-Ltd.....“Our objective of foraying in the education sector is to provide world-class education in the region and prepare leaders for the future.”
MANOJ GAUR, MD, Gaursons India

Capture“Our country is all set to enter the next phase of development where its position will not be of a developing country, but of a reigning global power. To carry out that process and assert our position in the global order, we will need confident and globalised Indians and that is where the school education is going to be crucial. The TPWSI is not just a venture to us, but our participation in that process.”
PRIYANKA NAGAR, Vice-Chairperson, Paras Group

The Wave education foray preceded its entry into the real estate sector. Besides operating a residential school in Noida by the name of Genesis Global School, the group through its non-profit NGO has been running a charitable special school for mentally and physically challenged children.
As recently as September last year, another prominent real estate player, Gaursons, stepped into the education sector by laying the foundation stone of Gaur’s International School at Gaur City 2 in Greater Noida West.
The latest to join the education bandwagon is the Paras Group, a well-known name in dairy products, real estate and healthcare sectors. The group is set to open the first campus of The Paras World School India’ (TPWSI), at Sector 50 in Gurgaon sub-city.

Mr. Rahul pic“We intend to open around I 0 new schools in next five years with one in Noida Extension and another at Bulandshahr in the near future … Aiso, we intend to start employability enhancement and vocational training courses in the campus for increasing the rate of employment in these areas”
RAHUL SINGH RAGHAV, Director, MMR Group

A report by rating agency CARE pegged the market size of the education industry in the country around 23.83 trillion ($62.34 billion) in FY14. Higher education contributes 59.7 per cent of this, school education 38.1 per cent, pre-school 1.6 per cent, and technology and multi-media the remaining 0.6 per cent.<
The Centre has allocated 2500 crore in the Union Budget 2014-15 to set up five more IITs and five new IIMs. A national multi-skill programme called ‘Skill India’ is proposed to be launched as announced by the Finance Minister in his Budget speech.
According to a survey by DTZ India, nearly 5,550 million square feet of real estate demand would arise from the higher education sector to achieve a GER of 30 per cent by 2020. This includes development of educational institutes and support services like hostels, retail space, etc.
Among the realty players’ education forays, the Jaypee Group of companies can easily be dubbed as the trailblazer. Its education initiatives started in 1984.

The Group will build, manage and run all the schools on its own for the first five years and may offer franchisees thereafter. It has plans to open schools abroad too at the “appropriate time.”

Asked if it’s a late entry into the education sector as many players from other industries are already into this in a big way, a Group spokesperson said: “We have never hurried up in any venture and do our proper homework before taking plunge in any sector. Moreover, India’s school level education has just been opened for international curriculum, so we have entered the field right on the time.”

CaptureCaptureThe Group also has plans to open The Paras World School India or TPWSIs in cities too where it doesn’t have its projects. It plans to open TPWSIs in the leading cities in north India in the next few years.

Regarding the Government initiatives, the Paras Group says: “Contrary to perception, our Governments and its education ministries are in tune with changing times and are taking all the necessary steps to promote education.”

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Talking about the education foray of Paras, Priyanka Nagar, Vice-Chairperson of the Group, told Realty & More: “Our country is all set to enter the next phase of development where its position will not be of a developing country, but of a reigning global power. To carry out that process and assert our position in the global order, we will need confident and globalised Indians and that is where the school education is going to be crucial. The TPWSI is not just a venture to us, but our participation in that process.”

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