Competitive Strategies of Real Estate

Abstract

The real estate industry in Kenya has largely grown in size in the recent past 20 years. From previously a s industry that was largely unknown, it is now a constantly expanding industry with many new participants. The industry however remains very complex in its operations with matters of real estate ownership and transfer being very sensitive issues among the Kenyan citizens. The government in its bid to regularize the dealings in the market has in introduced various regulatory controls in form of Acts and policies. These, together with the fact that real estate is a very inelastic product and most of all immobile have rendered the participation in the industry very hard. The changes in the industry environment together with the increasing competition has caused the firms to change their competitive strategies in order to achieve profitability and maintain their survivalin the market. The study sought to establish the various strategies that the firms were employing. Porte's generic strategies were the basis of the study because they are applicable to all kinds of industries whether based on service or goods. The study data was based on a sample of 39 firms. The data was collected through questionnaires. 45 questionnaires were administered through drop and pick later approach because of the unavailability of the owners and 39 responded.

The findings of the study indicate that the most commonly utilized strategy was differentiation focus followed by differentiation broad. Cost leadership strategies were found unpopular among firms in the industry. Many firms adopted the competitive advantage strategy based on differentiation as opposed to cost leadership. Differentiation places the firms at high ranking in terms of qualityand customer service, issues that are key to attracting and maintaining clientele. The competitive scope preferred was narrow, with many firms choosing to specialize in one section of the market mainly the middle to high income residential properties. The firms faced various challenges in the process of trying to maintain a competitive position in the market. The greatest challenges were identified as the rising levels of inflation and interest rates and the reduced disposable income available for real estate investment and for use in rental payments. Competition from unregistered practioners also came high as a challenge for the registered firms due to the unhealthy competition that they brought forth.