Builders go hunting for schools

Those developing townships are looking for tie-ups to improve marketing mix

MUMBAI: With residential housing looking pricier than ever, real estate and township developers are looking for a new USP (unique selling proposition).

Schools seem to be high on their radars, and many of them are planning tie-ups with education providers. Guaranteed school admissions have always been a big draw for property buyers.

While alliances between schools and property developers have been common from the early 1990s, real estate funds and other education providers have spotted an opportunity and are now scurrying to get a piece of the action.

“We want to acquire property and provide intellectual property to the trusts that run schools,” says Shantanu Prakash, chief executive officer of Educomp Solutions. Laws permit only trusts to manage schools.

Prakash is targeting about 100 such Educomp-branded schools across townships in the next three years.

The company says it will buy the real estate for the school from the developer and also provide the intellectual property required for running it. This includes Educomp’s digital content library, training manuals for teachers, lesson plans and books, which would guide the trust in running the school.

“Without schools, it will be difficult to sell property within townships,” says Pranay Vakil, chairman of Knight Frank India, indicating the potential for the education business.

Data from Knight Frank indicates there are around 100 integrated townships in various stages of development across the country. And many developers plan to tie up with more than one education provider. 

“Depending on the size of the township, we are looking at the possibility of tying up with a number of schools,” says Pradeep Jain, chairman of Parsvnath Developers, which, according to its website, is developing nine townships.

SS Asokan, executive director of Shriram Properties, which is developing three townships, one each in Kolkata, Chennai and Bangalore, says that while he is in talks with various institutions, no commercial modalities have been worked out as yet.

DLF, meanwhile, has already tied up with Summerfield Residential & Day School, Shri Ram School and others for various phases of its development in Gurgaon, near Delhi.

“Schools are mandated in the master plan of any township project. The type and number of schools are decided based on the population going to occupy those townships,” says Ajay Khanna, managing director of DLF Commercial Complex.

Branding will be a key aspect in deals between developers and education providers. “We are looking to tie up with schools that would improve the brand equity of our townships,” says Kunal Banerjee of Ansal Properties & Infrastructure, which currently has 16 townships under development.

In Mumbai, examples of such branding exercises abound. In the early 1990s, the Rahejas got Bombay Scottish to set up shop at their Powai complex.

During the second phase of the project, anyone buying a flat in the complex was guaranteed admission to the school.

Similarly, the Hiranandanis got an ex-principal of Cathedral and Sir John Connon School to head their Powai school. The Hiranandanis also have two schools at their Thane township.

Funds that invest in the real estate sector are also looking at the education space.

“There will be education providers who want to capitalise on this opportunity, but they
may not have the capital to buy the property,” said the head of a real estate fund.

The fund would step in here, buy the property and give it out on lease to the education provider.

“The real estate component of a number of such alliances will be spun out into a special purpose vehicle, and then listed, thus providing us with an opportunity to exit,” he added.

And before the exit, the fund can also earn rental income, and a fee linked to the revenues generated by the education provider.

The HDFC International Real Estate Fund, which raised $800 million from overseas investors in August this year, is one of those interested in tapping this new, potentially rewarding prospect.

So while property developers may have already negotiated a number of individual deals, education as a business is set to assume larger proportions within these townships, what with real estate funds set to join the action.