Effect of Macroeconomic Variables on Performance of Real Estate Investment Trusts in the Nairobi Securities Exchange

Abstract

Various macroeconomic variables have been found to determine the performance of REITs as investment platforms. The key variables have been indicated as macroeconomic factors based on the kind of REITs and level of investigation. The study sought to establish the effect of macroeconomic variables on performance of Real Estate Investment Trusts in the Nairobi Securities Exchange. The study was bases on descriptive design of research. Secondary data was used in the investigation. The report's data was gathered on a monthly basis between 2016 and 2020. Data on the selected macroeconomic variables was obtained from CBK while data on stock prices of Stanlib Fahari I REIT was collected from the NSE. Monthly data was used in this investigation giving a total of 60 data point. The researcher utilizes descriptive statistics together with multiple regression and correlation for analysis of the data. The data was analyzed through SPSS 25. Multiple regression model was used to establish the effect of macroeconomic variables on Performance of REITs. In this research, significance of the model was checked utilizing ANOVA. From the research findings, the study showed that exchange rate had a weak significant correlation. This indicates that exchange rate had a weak negative relationship with Performance of REITs across Kenya. The findings showed that interest rate has an insignificant relationship with performance of REITs. On the other hand, inflation rate showed a negative relationship with performance of REITs. The study found a positive relationship between GDP and REIT performance. The study concludes that macroeconomic variables have no significant affect listed REITs’ performance in Kenya. This study recommends that the government come up with relevant policies that would ensure the reduction of inflation rates and exchange rates while increasing growth rates. The study recommends similar study based on other variables, different period, and primary data.