How good schools drive residential development success

Insights by Devanjali Dutt, Manager Consulting MENA, JLL

March 15, 2024

The well-being of a neighbourhood and the performance of its local schools are intricately linked. Research consistently shows that strong schools create thriving communities while low-performing schools can have a detrimental impact. A survey found that 53% of homebuyers with school-age children prioritise school quality when choosing a new home. This high demand for good schools drives property values in those areas, attracting investment and creating a positive cycle. Therefore, good neighbourhood schools play a vital role in promoting equity, fostering a strong sense of community, and offering educational advantages. This makes them a win-win for both developers and homebuyers.

Benefits for developers

Schools act as the "hubs and hearts" of residential communities. When planning a new development, it's crucial for developers to assess the availability of quality education in the area and make provisions if necessary. As per global best practices, if an on-site school is required, it should be large enough to cater to the expected demand generated by the development.

A good neighbourhood school offers developers several advantages. Here are some key reasons why developers should consider incorporating schools into their residential projects:

Anchor/family driver: A good school has become increasingly important to homebuyers. In fact, realtor surveys often show that school considerations rank higher than amenities like bedrooms or pools.

Selling point: The presence of a good school within a residential project can set it apart from the competition. Families with young children are drawn to the convenience of having a school near their homes, particularly for working parents. Urban planners should leverage schools as anchors for neighbourhood development plans, showcasing the potential for future developments in the vicinity.

Faster sales: High-performing schools drive housing demand. Studies show that one in five homebuyers would be willing to pay a premium (6-10%) for a property near their preferred school. Homes located near top-rated schools enjoy increased exposure, with higher viewings and quicker sales than the average market property.

Shared community facilities: Many schools offer facilities, such as sports fields and auditoriums, to the broader community outside of school hours. This provides residents with access to additional amenities within walking distance.

Benefits for homebuyers

Living within a school zone brings numerous advantages for homeowners, regardless of whether they have children. With education playing a crucial role in buyer decision-making, access to a good school significantly influences a residential property's desirability and long-term value. The benefits for homebuyers include:

Convenience: Proximity to a good school offers convenience for both parents and children. Reduced travel time enables children to engage in other activities beyond school hours, while parents can save time on daily commutes.

Safe investment: Homes in areas with high-performing schools are more resilient to market fluctuations. Studies have shown that property values in these areas tend to hold steady during economic downturns, while those near low-performing schools can experience significant decline. Additionally, the potential for long-term tenants is higher, as parents may choose a location specifically because of a school.

High possibilities of capital appreciation: Properties located near good schools tend to attract a larger pool of buyers when placed on the market, potentially leading to higher offers due to the demand for quality education.

Long-term tenants: Renting out a property within close proximity to a school often leads to longer tenancies as families prefer staying in the area for their children's education. This stability reduces the risk of vacancies and may enable property owners to charge higher rents due to the desirable location.

Choosing the right operator for success

Selecting the right operator is crucial to establishing good schools within residential communities. Operators should demonstrate effective cost management strategies, a developed sales and marketing network, and proficiency in package development and marketing efforts. Operators with a proven management track record are invaluable assets, enhancing the long-term viability and profitability of the investment.

Collaboration between owners and operators is essential for successful management. Agreements that allow for owner involvement in areas such as budgeting, expenditure, and staffing are more appealing to investors. The quality and reputation of the operator's brand can significantly influence investor decisions. Well-known and respected operators often instil confidence and reassurance in potential investors and investment advisers.

Additionally, a transparent process that encourages competition between selected operators allows owners to secure the best terms and conditions for managing their educational facility.

In conclusion, it is evident that good schools play a crucial role in driving the success of residential developments. Not only do they attract homebuyers and increase property values, but they also contribute to the overall well-being and sense of community within a neighbourhood. It is also important for developers to select the right operator to ensure the long-term viability and profitability of the educational facility.

Let’s work together to build a brighter future for your institutions and the community you serve.

Looking for more insights? Never miss an update.

The latest news, insights and opportunities from global commercial real estate markets straight to your inbox.