HK's schooling woes dim city's role as financial hub

By Lisa Yuriko Thomas and James Pomfret

HONG KONG (Reuters) - As global companies expand in Asia, financial hubs such as Hong Kong are suffering a shortage of international school places that may blunt the city's competitive edge against regional rivals including Singapore.

International schools across Hong Kong are reporting record applications and lengthy waiting lists, prices of school debentures to guarantee places have soared and foreign business chambers are warning the situation is becoming critical.

"You can't imagine the difficulty until you physically get here," said Fiona Hunt, a British mother of two who recently moved to Hong Kong with her husband, a financial services professional. "You hear the stories day in and day out of all the people who have to go back home because they literally can't find a place for their child."

As a low-tax commercial gateway to China with some 36,000 international school spots, Hong Kong has faced cyclical shortages in the past. Indications suggest the current crunch, especially for primary school spots in top schools, is especially acute.

In April, a survey by the Canadian Chamber of Commerce in Hong Kong noted "the inability to readily access a high-quality international standard education is detrimentally affecting businesses across Hong Kong." Some companies are even going so far as to limit staff hires to single or childless candidates.

"There's been a huge increase in applications pretty consistently over the last three or four years," said Heather Du Quesnay, the chief executive of the English Schools Foundation (ESF), one of Asia's largest international school providers with around 16,000 students in 21 schools across Hong Kong.

"The pressure's huge and just managing the disappointment of parents is very demanding," she said.

High annual school fees in Hong Kong ranging from $23,100 at the Hong Kong International School to $12,500 for an ESF secondary school place and debentures of up to HK$10 million ($1.3 million) at the Kellett School haven't dented demand.

While waiting lists are often swollen by families making multiple applications, most kids do eventually find places even if they are not in the preferred schools.

Relocation experts say however, the uncertainty and stress are causing more and more expatriates to simply choose other cities for the sake of their kids.

ASIA GROWTH

With Asia already the fastest-growing international school market in the world, the necessity of building more private schools will only grow as the region gains in affluence and economic clout.

Major cities such as Hong Kong, Singapore, Shanghai and Tokyo are scrambling to attract and retain top global talent in sectors including banking and professional services as Western economies struggle and investment streams east.

This tug-of-war for talent makes it imperative for cities to provide broader lifestyle incentives for globally mobile executives to stay.

"At the moment we're seeing quite a few issues with regards to Europe and the U.S.," said Richie Holliday with Morgan McKinley, a recruitment consultancy.

"A lot of candidates are expressing a lot more interest in Asia. There's a lot of growth here. There's double-digit growth continually coming out of China. We have a lot of new wealth in the region which is driving investment in asset management."

Asia, with around half the world's total of nearly 6,000 international schools, is expected to drive growth in this sector in the next few years with school numbers expected to almost double globally by 2020 as demand surges, particularly amongst Asians opting for a broader, bilingual education.

To tap the booming multi-billion dollar industry, a slew of prominent U.S. and U.K. schools are establishing Asia campuses. These include Wellington College in China, Branksome Hall in South Korea, Dulwich College in Abu Dhabi, Epsom College in Malaysia, Harrow in Hong Kong and even a Haileybury in Kazakhstan.

Singapore, which vies with Hong Kong as a financial center, has also struggled to cater to swelling demand for places at international schools in the city state.

But with locals largely barred from enrolling in international schools and local schools offering schooling in English and Chinese anyhow, its seen to be far more receptive to the schooling needs of foreigners than Hong Kong.

HONG KONG VS SINGAPORE

Singapore's tight supply is also expected to ease with the opening of new sites, including the launch of a second campus by the popular United World College that charges around $25,000 in tuition fees per year, while Cognitas, a U.K. education group, will open a 2,750 place school next year.

In space-starved Hong Kong, where land is among the most expensive in the world, the government says it is trying to ease the supply bottleneck by allocating new greenfield sites and buildings that will create 5,000 school places in the next few years.

Some say the government needs to do more, particularly with the former British colony's business allure already hit by high property and rental costs, along with poor air pollution.

As Hong Kong drags its feet, the governments of Malaysia, Thailand and South Korea are gearing up to become educational hubs. Malaysia for example, is developing Iskander EduCity near Singapore, which has attracted major investment from Raffles Education Corp, one of Asia's largest private education groups.

"School spaces is such an important (factor) because it acts almost like a trump card. If you can't do it, then the rest of the hand doesn't make any difference. It's extremely important."

For the Mullins, a British family living in a breezy Hong Kong beachfront neighborhood, the stresses of finding a school for older son Harry meant they are taking no chances with newborn Jake and are putting him straight on a waiting list.

"It sounds crazy to plan it that far in advance," said father Daniel Mullin.

"(But) if you don't and you leave it to the last minute, then he stands literally no chance of getting in anywhere," his wife Cathryn added.

(Additional reporting by Kevin Lim in SINGAPORE; Editing by Matt Driskill)