The real estate sector and infrastructure firms like GMR and Hindustan Construction Company (HCC) have announced plans to establish university campuses and other educational institutions within the country. This strategic move aims to capitalize on the lucrative and growing education industry.
Growth in the Education Industry
The education industry in India is valued at over 10 billion US dollars and continues to experience robust growth. As the real estate market faces challenges, developers are increasingly exploring alternative assets such as educational institutions.
Partnerships and Revenue Generation
Partnerships between developers and educational institutions are becoming more common in townships and Special Economic Zones (SEZs). These partnerships not only generate revenue but also enhance the attractiveness of the development projects.
"Access to social infrastructure such as schools and colleges serves as attractive features that make it easier for a developer to sell projects," said Chintan Patel, Associate Director of Transaction Advisory Services at Ernst & Young (E&Y).
He further highlighted that partnerships between developers and international institutions benefit society and lead to the development of retail, office, and residential spaces around the educational facilities.
Business Models
The tie-ups usually operate on a build-and-rent business model. The developer acquires the land and constructs the necessary infrastructure for the educational facility. The educational institution runs the school or college and either pays rent or works on a revenue-share model.
Companies in Education Sector
Hindustan Construction Company (HCC):
- Acquired 500 acres for educational institutions at Lavasa, its hill city project near Pune, Maharashtra.
- Partnered with Symbiosis, Bangalore-based Christ University, Institute of International Business Relations of Germany, Switzerland-based hospitality Management Institute Ecole Hoteliere de Lausanne, and Educomp, among others.
Global Infrastructure Player GMR:
- Collaborated with Canada-based Schulich School of Business to build a campus in Shamsabad, Andhra Pradesh.
- Will construct the physical infrastructure and earn a management fee for maintaining residences and hostel facilities.
- Planning an aviation academy on 25 acres in the same region, supported by its international airport project in Hyderabad.