Gems Education is opening 5k new school seats this September despite conflict-driven construction delays

Dubai-based school operator Gems Education is delivering 5k new seats this September despite construction delays earlier this year due to the conflict, forming part of a AED 2 bn investment to develop 20k new seats across Dubai and Abu Dhabi over the next three years, Gems CEO Dino Varkey tells EnterpriseAM. Gems is launching a new school, its latest Gems Founders School, in Nad Al Hammar, and is also adding capacity through expansions of existing schools, Varkey says.

“Elements of [our expansion plan] have slowed down a little bit, but none of it has stalled,” Varkey says on the impact of the conflict’s supply chain disruptions to construction timelines. Besides the impact on the timeline, costs have also gone up, Varkey adds. “There's been an inevitable escalation in the underlying cost base [...] but the project feasibility studies that we do for any school that we want to invest in usually have an appropriate level of contingency built in anyway, so these are costs that we can frankly absorb,” he says.

REMEMBER- We reported yesterday that Gems — along with other school operators in the UAE — is actually in for a better start to the school year than expected. Retention is strong, and teacher attrition is solid. If you've missed it, read more on how things are shaping up ahead of the school year here.

In terms of funding, the firm’s capital expenditure needs for the next three years are “fully covered,” Varkey tells us. The firm had raised USD 3.25 bn from four Emirati lenders back in 2024, facilitating asset manager Brookfield and its consortium’s acquisition of a majority stake in the Dubai-based school operator — one of the largest private equity transactions in a business in the Gulf.

His read on domestic demand? “[The growth momentum] will come back,” he says as he notes that his expectations of the year ahead in terms of growth are more conservative than the past few years. “The fact that we're still able to grow [despite the headwinds], I see as an incredible positive,” Varkey says. “Would I like to be growing at the pace that we have historically grown at? Of course [...] but these circumstances are temporary, and the way that we've looked at the UAE has always been long-term, and none of this impacts the long-term trajectory of the nation,” he adds.

The domestic expansion angle

The school operator is focusing 75% of its investment on the affordable segment, and Varkey tells us that comes down to a very strong and “resilient” demand base across that segment, as opposed to premium schools which are prone to more volatility during periods of instability.

Take GSRI: The school operator recently invested USD 100 mn in building Dubai’s most expensive school, Gems School of Research and Innovation (GSRI), which opened its doors last school year. “If it wasn't for the conflict, GSRI would be at incredible numbers at the start of year two,” Varkey tells us. “It certainly exceeded our expectations when we opened it,” he says, adding that the decision to build a school that caters to the ultra-wealthy segment — its fees are projected to reach up to AED 206k — with features like robotics labs and a helipad, came as the market in Dubai “matured.”

The ambition is to open more of that type of school in the future, but that’ll come down to “the market and the broader economy,” he explains. For now, the focus is mostly on mid-market, and still largely on British curriculum, which Varkey says has the broadest appeal across many countries. Varkey is also keeping an eye on IB, which he says is growing in demand, and American-curriculum schools as well.

On a global scale…

The company is still eyeing “both organic and inorganic acquisitions in adjacent markets like Saudi Arabia,” and those remain a priority for Gems, Varkey tells us. The school operator had submitted a bid last year to acquire Saudi school operator Ajialuna Educational, with Ajialuna’s majority owner, Sulaiman Alrajhi Holding, said to be seeking a full exit. No updates on the acquisition have been made public yet.

The firm is also expanding through its school management arm, GEMS School Management (GSM), which currently has 17 schools under its belt and is expected to grow to about 20 schools, with several slated to open in Zanzibar, Georgia, and Cyprus, Varkey says. The point of GSM is to “diversify” the business geographically, he adds.