News release

China’s tier two and three cities are attracting international school investors

JLL’s latest research looks at the key trends and benchmarks of the market

November 26, 2019

SHANGHAI, 26 November 2019 – International schools are growing at a steady pace in Asia Pacific, it’s critical for the investors to understand the building and operating costs, as well as the key industry trends in local markets in order to make informed decisions. According to the latest research from real estate and investment management firm JLL (NYSE: JLL), Hong Kong (China) is the most expensive market to build and operate an international school, while Kuala Lumpur is the cheapest.

The research, Making the Grade, looks at growth, trends, and complexities of the international schools market in Asia Pacific. This includes construction and operating cost benchmarks for international K-12 educational facilities in six of the fastest-growing markets in Asia Pacific.

Susan Sutherland, Head of Corporate Solutions Research for JLL in Asia Pacific noted, “The cost of building and operating an international school and the trends affecting the sector will define location choice and long-term operational success. Real estate costs are typically the second largest operational cost category, behind only labor cost – and are therefore a key lever for optimizing and improving efficiency for schools.”

Among the six markets that JLL tracked in Asia, building and operating a premium international school is the most expensive in Hong Kong (China), with a build cost of USD 3,230 – 3,800 psm (GFA) and an operating cost of USD 59-70 psm (GFA). The least expensive market is Kuala Lumpur.  In Mainland China, the cost to build a premium school is between USD 2,120 – 2,870 psm (GFA) and the cost to operate is USD 46-65 psm (GFA). The research also finds that building premium schools can cost up to 33% more than mid-market schools, while operating costs are averaging 20% higher. The cost differential can primarily be attributed to the increased number of specialist facilities, which are more costly to build and maintain, as well as the elevated service standards.

Besides industry disruptors such as shortage of teacher, regulatory conditions, and increasing domestic enrolment, real estate disruptors are also affecting the international school market. For instance, amid intense constraints on land supply, vertical schools (a multi-storey school built on a relatively small land site) are becoming more common in some of Asia’s largest and densest cities, like Hong Kong, Singapore and the tier-one cities in Mainland China.

In China, critical elements need to be considered when building and operating international schools, including the cost of living, government regulations, air quality, etc. With economic growth in China’s tier-one cities notably slowing, these markets may no longer be as attractive for education investors. Tier-two and tier-three cities, which are seeing accelerating growth, could support the viable and sustainable growth of a school.

John Mortensen, Senior Director of Education Services for JLL in Greater China points out, “International schools are increasingly complex to develop and operate. Selecting the next school requires a structured and methodical approach; it is critical for investors and school operators to understand consumers’ expectations, capital investment requirements, operating costs and risks. Creating a differentiated value proposition is the key in an increasingly competitive market.”

For more information, download the report here.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. Our vision is to reimagine the world of real estate, creating rewarding opportunities and amazing spaces where people can achieve their ambitions. In doing so, we will build a better tomorrow for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.3 billion, operations in over 80 countries and a global workforce of nearly 92,000 as of June 30, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit