We have all heard the phrase "you must do a feasibility study before any project." Fine words — but what does a real feasibility study actually look like on the ground? What exactly is its first step? When does the land come in, when does the engineering office appear, and when do we calculate profits?
In this article from Raghdan Real Estate, we decided to do something different: instead of explaining theory, we will walk you through the entire experience. We take one real example — opening a private school on leased land — and travel with you from A to Z in the correct chronological order, with numbers: from verifying requirements (before you get trapped with unsuitable land), to signing the lease and its clauses, to the engineering office and licenses, to construction and fit-out costs, to salaries and operations, all the way to the golden question: how many students do I need to reach break-even and start profiting?
Why did we choose a school rather than, say, a fuel station? For an important regulatory reason we will explain shortly. What matters now: even if you never intend to open a school in your life, read this article — because the methodology you will see applies to any investment project on earth: a warehouse, a wedding hall, a medical center, retail showrooms. The examples change; the methodology is one.
An important note before we begin: all figures in this article are approximate, for educational illustration, and vary by city, district, project size, and market conditions. Official requirements belong to the competent authorities (Ministry of Education, Ministry of Municipal Affairs, Civil Defense) and are updated continuously — verify the latest version before any actual step.
First: Why a School and Not a Fuel Station?
When we considered the article's example, the two leading candidates were a private school or a fuel station — both classic operational real estate projects on leased land. But there is a fundamental regulatory difference: a fuel station today cannot be opened by an independent individual investor — modern fuel sector regulations require a strategic partnership or franchise with one of the major licensed fuel companies before you even begin, under their specifications, branding, and systems. Your decision is not fully yours, and its feasibility study starts at a negotiation table, not a calculation sheet.
The private school, by contrast, is a project whose decisions rest entirely with the investor from day one. Private education is among the sectors encouraged and supported under Vision 2030, and demand is perpetual — people keep having children and wanting nearby schools whatever the economy does. It is therefore the perfect example for a complete educational feasibility walkthrough. Let us begin.
Second: The Golden Rule — Requirements First, Land Second, Contract Third
The Most Famous Trap in the Project World
The most repeated beginner mistake goes exactly like this: an investor sees land offered for lease at an attractive price, gets excited, signs the contract, pays a deposit... then visits the engineering office and municipality only to discover the land does not meet the activity's requirements: the street is narrower than required, the area is below the minimum, or the location neighbors a prohibited activity. The result? A binding multi-year contract on land his project can never rise on. So memorize the order: know your activity's full requirements before searching for land, and find land that satisfies them before signing anything.
Private School Requirements — What Do the Regulations Say?
Under the Ministry of Municipal Affairs and Ministry of Education requirements for private educational buildings, the key location conditions include:
Street width: the building must face a street no less than 20 meters wide — a logical condition: a school means hundreds of cars and buses morning and noon, and a narrow street means daily congestion, neighbor complaints, and license rejection. Space per student: a minimum of 2 square meters per student inside classrooms, plus outdoor yards for activities and assembly. Parking: sufficient parking within the plot or its immediate surroundings per municipal standards, and a safe student drop-off zone. Neighboring uses: distance from hazardous or noisy activities (fuel stations, workshops, noise sources). Safety: full Civil Defense requirements — emergency exits, alarm and firefighting systems, staircases to specification.
Translating Requirements into Numbers: How Much Land Do We Need?
Our example: an elementary and middle school with a target capacity of 500 students. Accounting for classrooms (about 20 at an average of 25 students), labs, administration, prayer room, canteen, yards, and parking, the practical requirement is a plot of 4,000 to 5,000 square meters on a commercial street 20 meters wide or more. That is the "specification card" we hunt with — not just any cheap land.
And Demand Study Before Everything
Before even searching for land, feasibility question number one: does the district need a school at all? We study: the population of the district and its neighbors, the share of young families, how many private schools exist, their capacity and whether they have waiting lists, and the district's average income (which caps feasible fees). A new district filling with young families and only one crowded school = green light. An aging or school-saturated district = look elsewhere. Here Raghdan Real Estate Indicators serve you directly: price and rent growth in a district is a direct signal of its population growth and demand strength.
Third: The Land Lease — The Clauses That Protect Your Project for Twenty Years
Why a Long Contract?
Here is a point many overlook: a project like a school invests millions in construction on land you do not own — so the lease term is the lifespan of your entire project. A 5-year lease means you build with your millions, then the owner arrives after 5 years saying "I will not renew" or "I want double the rent" — and you are cornered, because you cannot carry your school building away. Hence the norm in large educational and operational projects: leases of 15 to 20 years (some reaching 25) — the duration that allows capital recovery and then comfortable profit-taking.
The Seven Clauses That Must Be in the Contract
1. The owner's written consent to the activity: the owner signs that the land is leased specifically for an "educational building/school" — government agencies will require this consent at licensing, and an owner who refuses to sign later means a frozen project. 2. A construction grace period: one to one and a half years rent-free or at half rent — you simply cannot operate before construction completes, and paying full rent on empty land is burning money. 3. Rent freeze then scheduled increases: fixed for the first 5 years, then pre-agreed increases (say 5–10 percent every 5 years) — never leave increases open to "market rates." 4. Renewal right: your priority to renew on known terms. 5. Registration on the Ejar platform: the electronically documented contract is the legally recognized one and your protection in any dispute. 6. Defined responsibilities: who bears government land fees? utility connections? the fence? 7. The building's fate at contract end: does it revert to the owner? with compensation? Agree today, not in twenty years.
And How Much Is the Rent?
In our example: a 5,000-sqm plot on a commercial street in a mid-range Riyadh district, approximate rent of 400,000 riyals per year (realistically ranging between 300 and 600 thousand by district and position). Note this number — it enters our calculations shortly.
Fourth: The Engineering Office and Licenses — Paper Before Concrete
What Does the Engineering Office Do for You?
After signing the lease (conditioned on requirements being verified), your first stop: an accredited engineering office. Its job: the site sketch and the architectural and structural drawings per the educational buildings requirements manual (classroom distribution, corridors, staircases, ventilation, natural light, emergency exits), then submitting the building permit application on the Balady platform and following it to issuance, then construction supervision ensuring the contractor builds to drawings. Approximate fees for a project this size: 150 to 300 thousand riyals including design and supervision.
The License Chain in Order
1. Preliminary license from the Ministry of Education via the Ministry's investment platforms — the service itself is free, granting you the initial green light. 2. Building permit from the municipality via Balady after drawings are approved. 3. Construction, then Civil Defense inspection for safety, firefighting, and alarms. 4. Commercial registration with an educational activity plus Chamber of Commerce membership. 5. Final license from the Ministry of Education after inspecting the finished building — with it, you officially open your doors. The realistic total licensing duration from first application to opening: 8 to 14 months if everything runs smoothly — build it into your timeline from the start: signing the lease in summer means opening in the academic year after next, not the next one.
Fifth: Construction and Fit-Out — Where Do the Millions Go?
Construction Cost
A two-story school building with about 4,000 sqm of built area (classrooms, computer and science labs, library, administration, prayer room, canteen, school-standard bathrooms), at an average construction and finishing cost of 1,500–2,000 riyals per built square meter: approximately 6 million riyals including the fence, yards, shades, and infrastructure. (Apply here everything from our article on the warning signs of structural problems — strict engineering supervision today saves you millions in repairs ten years from now.)
Fit-Out
An empty building is not a school. Fit-out: classroom furniture (desks, chairs, smart boards), computer and science labs, camera and security systems, air conditioning, point-of-sale and e-learning systems, canteen and administration equipment: about one million riyals. (School transport we lease through annual contracts with operators instead of buying buses — converting a capital cost into an operational one.)
Founding Cost Summary (Required Capital)
Engineering fees, licenses, and designs: 300 thousand. Construction and finishing: 6 million. Fit-out, furniture, and systems: 1 million. Rent during establishment (one year at half rent per the grace period): 200 thousand. Pre-opening expenses (early hiring, marketing, insurance, contingency reserve): 300 thousand. Approximate total: 7.8 million riyals. This aligns with published market study ranges for small-to-medium schools (roughly 4 to 19 million depending on size and city).
Sixth: Operations — Salaries and Annual Expenses
The Team — The Largest Operating Item
For a 500-student school (20 classes): about 25 teachers — private sector teacher salaries realistically start from 5,000 riyals and reach 8,000 and beyond for experience, with an important relief: Saudi employment support programs in private education (support reaching thousands of riyals of a qualified Saudi teacher's salary for years) reduce your net burden. At an average total of 7,000 riyals monthly: 2.1 million annually. Add 10 administrators and service staff (principal, deputy, counselor, accountant, reception, cleaning and security) at about 0.8 million annually. Total payroll: 2.9 million riyals per year.
The Rest of Operations
Electricity, water, telecom: 250 thousand. Maintenance, cleaning, operations: 150 thousand. Marketing, enrollment, platforms: 100 thousand. Insurance, fees, e-learning subscriptions: 100 thousand. School transport contracts (typically covered by transport fees collected from parents, so we count them as neutral). Miscellaneous and reserve: 100 thousand. Subtotal: 0.7 million. Add land rent of 0.4 million — total annual operating cost: about 4 million riyals.
Seventh: Revenue and Break-Even — The Moment of Truth
How Much Is Tuition?
Private school fees in the Kingdom stretch from about 4,500 riyals at budget schools to 85,000 at premium international ones, with most national-curriculum private schools clustering between 10,000 and 17,000 riyals annually. Our new school, in a mid-range district with competitive entry pricing: an average of 12,000 riyals per student per year. (Note the direct application of the pricing principles from our article on real estate marketing strategies — price from the market, not from wishes.)
Calculating Break-Even — The Most Important Number in the Whole Study
Break-even = annual operating costs ÷ revenue per student. That is: 4,000,000 ÷ 12,000 = about 333 students. This number tells you plainly: your 500-capacity school starts truly earning once enrollment passes roughly two-thirds of capacity. Every student above 333 adds nearly pure 12,000 riyals to your pocket; every student below it means you are paying out of yours.
The Three Scenarios — How Respectable Feasibility Studies Are Written
Pessimistic (350 students): revenue 4.2 million − 4 million = only 200 thousand profit — a full year's work for one employee's salary. Realistic (430 students by year three): revenue 5.16 million − 4 = 1.16 million annual profit. Optimistic (full 500): revenue 6 million − 4 = 2 million annual profit at a 33 percent margin — fully consistent with market studies placing stable school margins between 20 and 35 percent.
And When Do I Recover My Capital?
The usual reality: year one opens with 150–250 students (a natural, expected operating loss — plan for it in your capital), year two improves through reputation and referrals, year three approaches break-even then passes it. With profit climbing toward a stable 1.5–2 million annually, you recover the 7.8 million within 5 to 7 years of operation — excellent for a project with a 20-year contractual life: 13 years of net profit after recovery, plus the market value of the school itself as a running operational asset should you decide to sell.
Eighth: The Executive Summary — Your Whole Journey in Lines
You have now walked the full journey. Memorize it in order for any project: Months 1–2: district demand study + collecting the activity's complete requirements from official bodies. Months 2–4: hunting for land that satisfies them (4–5 thousand sqm, 20m+ street) and negotiating. Months 4–5: signing the 20-year lease with its seven clauses, documenting it, and the preliminary license. Months 5–8: engineering office, drawings, building permit. Months 8–20: construction under supervision. Months 20–24: fit-out, Civil Defense, final license, hiring, and marketing. Operating years 3–4: passing break-even (333 students). Years 6–8: capital recovery — then profit.
And note the biggest lesson: 80 percent of a project's success is decided before the first brick — in the accuracy of the demand study, the soundness of the requirements check, the fairness of the land contract, and the realism of the numbers. Projects rarely fail in construction... they fail in the paperwork before it.
Frequently Asked Questions
How much capital is needed to open a private school?
For a 500-student school on leased land: about 7 to 8 million riyals (6 million construction, 1 million fit-out, roughly 800 thousand for licensing, engineering, and establishment costs). Larger schools or owned land push the range to 10–20 million and beyond. These are approximate figures varying by city and specification.
What are the key location requirements for a private school?
Chiefly: the building facing a street at least 20 meters wide, a minimum of 2 square meters per student inside classrooms plus outdoor yards, sufficient parking and a safe drop-off zone, distance from hazardous activities, and full Civil Defense compliance. Always verify the latest version with the Ministry of Municipal Affairs and Ministry of Education.
What lease term suits a school project?
15 to 20 years as a reasonable minimum (some projects 25), because you are building with your millions on someone else's land and need years to recover and then profit. Never omit the core clauses: a construction grace period, frozen rent then scheduled increases, renewal rights, the owner's written consent to the activity, and Ejar registration.
How many students do I need to break even?
In our example: 4 million in annual operating costs ÷ 12,000 riyals tuition = about 333 students. The general rule: break-even usually arrives around two-thirds of capacity — and every student above it converts almost entirely into profit.
When does the school actually start profiting?
Realistically from year three or four: year one is a natural operating loss (30–50 percent occupancy), year two improves with reputation, year three approaches break-even. Capital is typically recovered within 5 to 7 operating years, and stable sector profit margins run between 20 and 35 percent.
How long do licenses take from start to opening?
8 to 14 months for the licensing track (Ministry of Education preliminary, municipal building permit, Civil Defense, commercial registration, final license) — and with construction, the full journey is about two years from lease signing to welcoming the first student. Time your plan to open at the start of an academic year.
Does this methodology apply beyond schools?
Yes, entirely — that is the article's core purpose. The same sequence serves any project on leased land: activity requirements first, then land that satisfies them, then a fair long lease, then licensing and construction, then computing operations, revenue, break-even, and the three scenarios. The numbers and authorities change; the methodology remains one.
Conclusion
A feasibility study is not an elegant file you commission and shelve — it is an organized journey of thinking you have now lived with us in full: we began with demand and requirements (the 20-meter street, 2 sqm per student) before any commitment, then gripped the land contract with its seven clauses and twenty-year term, then walked with the engineering office through the license chain, then distributed 7.8 million across construction and fit-out, then computed operations at four million a year and divided by tuition to discover our golden number: 333 students is the gateway to profit, full capacity means two million riyals a year, and full capital recovery arrives within seven years of a twenty-year horizon.
More important than any figure in this article: the order itself. Requirements before land, land before contract, contract before engineering, engineering before construction, and the pessimistic scenario before the dreams. Whoever walks in this order shields himself from most traps — whoever reverses it pays the price in lessons.
And before choosing your project's district — school or otherwise — open Raghdan Real Estate Indicators and see district growth, prices, and rents in actual numbers: the indicators that reveal where young families are gathering... are the same ones that show you where people need a school.
Did you find this guide useful? Share it with everyone holding a project idea and hesitating where to start — this article might be the difference between a project born sound... and a twenty-year-contract trap.
