$113

billion in additional investment will be needed in the private education sector by 2025


 


India’s Education Infrastructure Opportunity – 
An Overview

India is an important educational centre in the global education industry, with over 1.6 million education institutes catering to over 322 million students. India has one of the largest K-12 and Higher Education (HE) systems in the world.

The Indian education landscape has been remarkably transformed in the last few years, primarily due to India’s growing middle-class population, and increasing awareness of the importance of education. Private investments have played a significant role in the transformation of the Indian education system. Currently, private educational institutions comprise 23% of India’s total educational institutions, but account for 43% of total enrollments.

There is great potential for further development in the Indian education system. India’s education industry is expected to witness significant growth in the next few years, driven by growing urbanisation, aspiration for quality education, and increased service sector orientation.

Considering the demand outlook, this segment will require significant private investment to meet the demand for quality education infrastructure and related assets. As per a study commissioned by CBRE, Indian private education infrastructure will require an additional investment of USD 113 billion by FY25.

Key Drivers of Growth in the Indian Education Sector

oneFavourable demographics

%

of the world’s population, amounting to 1.3 billion people, lives in India

%

of India's population is in the age bracket 5-24

%

of Indian students pursue their education at private institutes

India is the world’s second most populous country, with over 1.3 billion people (17.5% of the world’s population). It has one of the world’s youngest populations, with a median age of ~26 years. Currently, over half its population is under 25 years old. The number of people in the age-group 5-24 years (that is, the education seeking population) is likely to increase from 476.3 million in 2015 to 478.8 million by 2020. 

twoIncreasing affluence and growing middle-class

The Indian middle-class is expected to expand dramatically to 583 million people (approximately 41% of its population) by 2025. With such an increase in the middle-class, and income levels, Indian spending patterns are also expected to evolve, with basic necessities like food and apparel declining in relative importance, and categories such as communications, education and healthcare growing rapidly.

Rising affordability and increased awareness of the strong benefits of education are expected to create significant demand for education. The share of education in total consumer spend increased from 5% in 2005 to 6% in 2015 and is expected to increase to 9% by 2025, which translates to a spending of approximately USD 67 billion.

threeServices sector led growth

%

of India’s GDP is from its services sector

%

of Indian employment derives from the services sector

%

is India’s expected CAGR from the services sector in 2016 – 2020

India’s services sector accounts for ~56% of its GDP and has grown at a CAGR of 7.5% annually for the past five years. This sector has been creating job opportunities in India, thanks to the availability of an abundant pool of skilled manpower at internationally competitive wages, and its ability to find low cost innovative solutions. A services sector job is perceived as providing financial stability and social stature, and thus holds aspirational value for the growing Indian middle-class.

Education is a vital key to services sector jobs. Hence, growth in the services sector is expected to create high demand for quality education and related infrastructure.

Education Infrastructure Requirement and Market Size

As of 2015, education infrastructure requirement in the target market is estimated to be 1.4 billion square feet, which is expected to grow at a CAGR of 11.5% to reach 4.1 billion square feet by 2025.

The education infrastructure market size of K-12 and higher education is currently estimated at USD 45 billion and USD 12 billion respectively. Increase in the target market is expected to create demand for related education infrastructure, which, in turn, will require private investments in the sector.

‘Target market’ is defined as “Households earning INR 5 lacs per annum (USD 7,930) and above” owing to its higher propensity to spend on ‘quality education’.

 

Edu-Infra Requirement(million sq ft)

 

Edu-Infra Market Size (US$ billion)

 

450

million Indian students will want full-time education in 2025


 


India’s Education Infrastructure Opportunity – 
A Summary

  • 322 million students pursuing full-time education
  • 43% of students pursuing their education at private institutions
  • 75 square feet of infrastructure required per student

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