MUMBAI: Infrastructure and real estate companies such as GMR and Hindustan Construction Company are setting up campuses for universities and higher education institutes to ride growth in the $80-billion-plus industry.
The higher education sector in India alone is worth $10 billion and is growing at a compounded annual growth rate of 12%, according to a report by private equity firm Kaizen. With the real estate market receiving a drubbing during the slowdown, developers are evaluating asset classes such as education.
Such partnerships are mushrooming in almost all new townships or special economic zones under development, as companies see the presence of educational institutes in a young project will drive in more revenue in the form of fresh investment for homes and offices.
“Access to social infrastructure such as schools and colleges serve as attractive features that make it easier for a developer to sell projects,” says Chintan Patel, associate director, transaction advisory services, E&Y.
A tieup between an international institution and a developer, he adds, will not only socially benefit the region, but will also allow developers to create a system around the institute, providing retail, office and residential development.
The companies’ collaboration with educational institutes follows a buildand-rent business model. While the developer acquires the land and builds the infrastructure for the educational facility, the institute runs the school or college. It either pays rent or works on a revenue-share model.
Among the companies laying out plans in education, HCC has earmarked 500 acres for institutes at Lavasa, its hill city project close to Pune. “Till date, Lavasa has invested around Rs 100 crore in the education space,” says Anuradha Paraskar, senior vice-president, marketing, Lavasa Corporation.
The company has tied up with Symbiosis , Bangalore-based Christ University, Institute of International Business Relations of Germany, Switzerlandbased hospitality management institute Ecole hoteliere de Lausanne and Educomp, among others.
Global infrastructure player GMR too has roped in Canada-based Schulich School of Business to set up a campus in Shamsabad, Andhra Pradesh, says V Raghunathan, chief executive, GMR Varalakshmi Foundation. The company will create the physical infrastructure for the institute, and in return, earn management fee on the maintenance of residences and hostel facilities. Besides, it is planning an aviation academy on 25 acres in the region, fuelled by its international airport project in Hyderabad.
Diversified infrastructure player MARG is training its focus on research, and is in a tie-up with US-based Virginia Tech University for a campus in its SEZ, Marg Swarnabhoomi, near Chennai.
Virginia Tech will set up three innovation centres focussing on automotive, nanotechnology and life sciences. The company has formed a trust with Virginia Tech, in which both have an equal partnership.
With big automobile companies like Nissan, Renault, Hindustan Motors and BMW having manufacturing facilities in Chennai, MARG believes a research centre on the automotive industry could see more investment coming in from companies. “Research and education will draw more investment in the SEZ,” says GRK Reddy, MD, MARG.
School infrastructure is an equally sought-after territory, with the kindergarten-to-class XII and the pre-school segments growing at CAGRs of nearly 14% and 35%, respectively.
New Delhi-based real estate player CHD Developers has tied up with education company Educomp to set up the millennium school in its township, CHD City, in Karnal.
While the market rate for the project is Rs 10,000 per sq yard, CHD Developers is offering the land to Educomp at Rs 4,000 per sq yard, says Ravi Saund, head, business development. A trust formed by the two companies will manage the day-to-day operations of the school, with CHD taking half the share of revenues.
Another Gurgaon-based real estate developer, Alpha G:Corp, has tied up with Dubai-based Global Education Management Systems (GEMS) for a K-12 school in its township, Alpha International City, in Karnal. GEMS has acquired eight acres from Alpha G Corp to develop its international school and will invest Rs 60-70 crore in this project over the next five years.
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