Major international student destinations, namely Australia, Canada, the United States and the United Kingdom, experienced a drastic increase in student volumes across 2021/2022. Global student mobility reached 6.1m in 2021, surpassing pre-pandemic numbers which stood at 5.3m in 2019. In comparison, international student numbers in Australia began gradually recovering to 2019 levels, with figures achieving a 5% increase. The figures from 2022 remain 12% below the levels from 2019.

 

The Canadian higher education market greatly benefited from the early reopening of its borders, with 2021 student figures surpassing pre-pandemic numbers (Exhibit 1). Neighbouring United States experienced a comparatively modest increase of 4% in international student numbers in 2021/2022, having experienced a significant -46% decline in 2020/2021 (Exhibit 2).

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Chinese student volumes have declined across the board, with a -9% decrease in the US and -5% in the UK. On the other hand, Indian student numbers have significantly increased, with volumes increasing by 19% in the US and 27% in the UK, across 2020/2021. Student flows from the African increased 12% in the US and a drastic 41% increase in the UK (Exhibit 3).

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Global Education Trends in 2022

 

Here are the top trends we observed in 2022:

 

1. The COVID-led surge in online education is here to stay, with pure online education providers pivoting to a hybrid approach for the future.

 

Byju, the Indian online tutoring giant grew incredibly over the last few years thanks to nationwide lockdowns and school closures, is pivoting to hybrid learning, with the acquisition of Aakash Institutes. Despite many in-person tutoring services reopening, online enrolments remain at a notable ~30%.

 

Many pure online learning providers felt the pressure of a post-COVID world. Growth in these companies significantly reduced from the levels during the lockdown, with some companies going backwards. 2U is expected to grow revenues at just 1.7% in 2022.

 

Some online-only players defy these trends and continue to grow. IU, Germany’s leading online university group grew its total student body to 100,000+ in 2022.

 

2. Global skills shortage has intensified the competition between leading international student destinations.

 

Work:Study restrictions have been temporarily eliminated in Australia and Canada, allowing students to work full-time while studying.

 

Australia now offers the best post-study work rights, with students in key sectors receiving 4-6 years of full working rights.

 

Agent aggregators have amplified the existing backlog of applications at universities and visa-issuing offices.

 

3. The purpose-built student accommodation (PBSA) sector has bounced back spectacularly and became a key investment sector in 2022.

 

The PBSA sector outperformed segments like office spaces that were largely impacted by sustained hybrid work arrangements in 2022.

 

PBSA occupancies are back down to pre-pandemic levels and room rates are quickly rising.

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Asia Pacific Education Trends in 2022

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Here are the top trends we observed in 2022:

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1. Chinese outbound education sector remains uncertain, thanks to the mixed signals from the world’s largest sender of international students.

 

COVID-related health concerns of parents prompted a sharp decline in Chinese student enrolment in American universities. The health concerns can be largely attributed to the poor handling of the US crisis, amplified by propaganda.

 

China’s stringent lockdown across 2022, lead to the middle class preferring full boarding schools in south-east Asia for their children.

 

While some tertiary groups have reported a return in Chinese enrolment interest, English language testing groups, essential for incoming Chinese students have not yet recovered.

 

2. Education sector M&A volumes decreased by -66%. 

 

M&A volumes in Asia-Pacific continues, to a lesser extent in tutoring, higher education and K-12 sectors. Ongoing sale processes in for-profit education groups Learning Lab, APU, SIS and the International Medical University should keep Education an active sector.

 

K-12 investments have largely shifted to Japan, SE Asia and India after intense regulations in the Chinese education sector. Regional K-12 education groups such as Taylors, XCL and Global Schools have emerged with significant backing from private equity.

 

3. Free Trade agreements make movement easier for students and provide new opportunities.

 

Free Trade Agreements between Australia/India and Australia/Indonesia should enable opportunities for campus development in India and Indonesia for universities (Monash, Deakin, Lancaster, CQU).

 

Co-recognition of qualification between India and Australia should enable easier migration of skilled workforce and lead to better outcomes for students.

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Australian Education Trends in 2022

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1. Inbound student traffic increased in postgraduate degrees.

 

Over 50% of all international students arriving in Australia are now enrolled in a postgraduate degree. This trend was largely facilitated by increased investment in undergraduate teaching in students’ home countries.

 

The role of campus-based extracurricular activities has declined, with students choosing online alternatives.

 

2. The 'Uni Adelaide and Uni SA' merger may spark a shift towards consolidation in the HE sectors.​

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In Dec 2022, the University of Adelaide and the University of South Australia announced their plans to merge into one entity. Western Australia may consider a similar move and consolidate. Some of Queensland’s 8 universities may have considered such a move behind closed doors.

 

3. Australian M&A and financing deals remain relatively active.

 

In April, GIC invested $407m in Wee Hur’s Australian Student Accommodation projects, maintaining the high interest in this asset class.

 

Up Education acquired Acknowledge Education, creating a for-profit tertiary group across AUS-NZ.

 

Bright Horizons entered Australia with the acquisition of Only About Children.

 

4. An added emphasis on application-based education to better prepare students to fulfil skills shortage domestically.

 

Increasing roles and intervention by corporates in education and skills training will lead to an enhanced combination of apprenticeship and tertiary education, consequently resulting in better corporate development options for students.

 

The uptick in micro-credentials of graduates looking to up-skill to better position themselves in the workforce.

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Schoolhouse's Predictions for 2023

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China

• Chinese domestic student volumes will rise due to high youth unemployment rates.

• Chinese outbound student volumes will surge on pent-up demand.

Tutoring

• The tutoring sector will start to consolidate, creating larger, global players in order to maintain margins.

M&A

• More listed education groups will go private as volatility will distract management.

• Volumes will bounce back as long-awaited transactions are completed.

Online Learning

• Online learning platforms will merge with in-person players to offer seamless hybrid solutions.

• More Hybrid degrees will be introduced and will flourish as it allows more flexibility for students.

Infrastructure

• Student Accommodations will continue to be short-supplied and yield curves will compress.

• Education groups will become more efficient in campus utilisation, fearing under-utilisation of their campus spaces due to sustained hybrid learning environments. 

Tertiary

• Universities will prepare students for the workplace, with more placements and internships.  

• Corporates will fund employees to study in partnerships with universities.

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